Nigeria’s debt profile is forecast to soar to N187.79 trillion in 2025, driven by increased government borrowing, naira depreciation, and rising borrowing costs. A report by investment firm Cardinalstone reveals the alarming trajectory of the nation’s debt, which has surged from N49.85 trillion in early 2023 to N134.30 trillion by mid-2024.
The report attributes the debt surge to factors including oversubscription of dollar-denominated domestic bonds, frequent issuances of Nigeria Treasury Bills (NTBs), and the sale of Eurobonds totaling $2.2 billion. It further highlights the impact of naira devaluation, which has significantly amplified the government’s financial obligations.
According to the Debt Management Office (DMO), external debt constitutes $43 billion, representing 47% of Nigeria’s total debt. Meanwhile, domestic borrowings account for 53%, with the federal government responsible for N66 trillion and state governments, including the Federal Capital Territory (FCT), owing N4 trillion.
Despite the debt-to-GDP ratio remaining slightly below the International Monetary Fund’s (IMF) 60% threshold for developing economies, Nigeria’s weak revenue base and foreign exchange volatility pose severe risks. By mid-2024, the country’s debt service costs had escalated to N6 trillion, consuming 50% of aggregate government spending and leaving limited resources for capital projects.
Analysts warn of potential debt sustainability issues as Nigeria faces mounting debt-service-to-revenue ratios, which jumped to 162% in 2024 from 128% in 2023. The report also outlines significant upcoming obligations, including Eurobond maturities averaging $1.33 billion annually over the next decade and total annual debt servicing costs of $2.24 billion.
Experts caution that if the trend continues, Nigeria’s escalating debt levels could trigger a financial crisis, further straining an economy already grappling with high living costs and insufficient revenue generation.