NIGERIA — The Nigerian Federal Government (FG) has increased its domestic borrowing to N10.85 trillion in the first four months of 2025, according to data from the Debt Management Office (DMO). This represents a 0.7% rise from N10.767 trillion in the same period in 2024, as the government seeks to finance budgetary deficits and address revenue shortfalls.
Debt Profile and Economic Pressures
Nigeria’s total public debt rose by 48.6% to N144.66 trillion in 2024, up from N97.34 trillion in 2023, with the FG accounting for 95% of this amount, or N137.28 trillion. This sharp increase is partly driven by declining oil revenues and rising debt service costs, which consumed 150% of the FG’s total revenue in 2024, up from 65% in 2023, according to the DMO.
According to vanguardngr.com, the significant rise in debt levels has placed substantial pressure on government finances, leading to a higher debt-to-GDP ratio of 52.9% in 2024, compared to 48.7% in 2023. The debt-to-GDP ratio is a critical measure of debt sustainability, indicating the country’s ability to meet its debt obligations without resorting to external support or risking default.
Short-Term Borrowing Instruments Gain Traction
The rise in borrowing is primarily attributed to Treasury Bills (TBs) and FGN Savings Bonds, which have become the government’s preferred instruments due to their shorter maturity periods and comparatively lower interest rates. Borrowing through TBs rose by 8.3% to N8.377 trillion in the first four months of 2025, up from N7.74 trillion in the same period in 2024.
The shift towards TBs reflects the government’s strategy to manage its financing costs amid high interest rates. FGN Savings Bonds also saw a significant increase, rising 49.5% to N17.29 billion over the same period, further underscoring the preference for short-term, flexible borrowing options. This move aims to reduce the long-term financial burden associated with higher interest long-term bonds.
Investor Demand Remains Resilient
Despite the high debt levels, investor demand for FG debt instruments has remained strong. The DMO received public subscriptions totaling N3.33 trillion for N1.45 trillion in bond offers during the first four months of 2025.
This strong investor interest reflects confidence in the government’s ability to manage its debt obligations, despite the ongoing economic pressures. The demand for government securities has been supported by the relatively attractive yields on these instruments, even as broader economic challenges persist.
IMF Recommendations and Fiscal Management
The International Monetary Fund (IMF) has advised Nigeria to reduce public spending and improve revenue mobilization to stabilize its fiscal position. In its April 2025 Fiscal Monitor report, the IMF projected a slight decline in Nigeria’s debt-to-GDP ratio to 52.5% in 2025, down from 52.9% in 2024.
However, it warned that fiscal deficits could worsen without more efficient financial management. The IMF highlighted the importance of boosting revenue through improved tax collection and enhancing spending efficiency to create additional fiscal space for critical social and economic investments.
Outlook on Fiscal Sustainability
Analysts have also expressed concerns about the sustainability of Nigeria’s fiscal position. While GDP rebasing could potentially lower the country’s debt-to-GDP ratio, ongoing borrowing, combined with weak oil revenues and high debt service costs, could further strain the government’s finances.
They caution that without significant improvements in revenue collection and spending efficiency, the fiscal space may continue to narrow, complicating efforts to stabilize the country’s debt profile over the long term.
