The Federal Government of Nigeria, under President Bola Tinubu, witnessed a sharp rise in domestic debt servicing costs during the first quarter of 2025, hitting ₦2.6 trillion—a 65% increase from the previous quarter. This is according to new data released by the Debt Management Office (DMO).
Compared to the same period in 2024, the increase is even more drastic, with a 164% year-on-year surge. The DMO attributes the ballooning debt service obligations to persistent fiscal pressures caused by underperforming government revenues.
One of the key drivers of the spike was the significant growth in Nigerian Treasury Bills (NTBs), which more than doubled to ₦961 billion in Q1 2025 from ₦374 billion in Q4 2024. Consequently, NTBs now account for 36.8% of the country’s domestic debt service, up from 23.7% in the previous quarter.
Additionally, interest payments on Federal Government of Nigeria (FGN) bonds remained a major burden, constituting 54% of total debt servicing costs. The cost of servicing these bonds rose by 47% year-on-year, reaching over ₦1.4 trillion.
The DMO also reported interest payments of nearly ₦68 billion on foreign exchange (FX)-denominated domestic bonds during the same period.
Looking ahead, the office warned that debt servicing will continue to consume a significant portion of federal revenues, raising concerns about Nigeria’s long-term fiscal sustainability.
Although the government is banking on proposed tax reforms to boost revenue generation, the implementation of these measures is not expected to begin until 2026, delaying any immediate relief for the country’s strained finances.
The report paints a worrying picture for Nigeria’s economic outlook, with debt servicing costs rapidly outpacing revenue growth and leaving little fiscal room for development spending.
