Nigeria Spends N6.32 Trillion on Domestic Debt in 9 Months Amid Rising Interest Costs

The Nigerian federal government spent a staggering N6.32 trillion on domestic debt servicing between January and September 2025, surpassing the N5.87 trillion spent on the entire 2024 fiscal year, according to the latest Debt Management Office (DMO) data. Interest payments constituted the bulk of this expenditure, totaling about N6.06 trillion, while principal repayments accounted for the remainder.

A closer look at the numbers shows that Federal Government of Nigeria (FGN) bonds were the main driver of domestic debt costs. Interest on naira-denominated bonds steadily increased during the period, peaking at N804.95 billion in September. Overall, FGN bond interest payments alone exceeded N5.35 trillion in just nine months, highlighting the heavy burden of long-term borrowing.

Short-term instruments like treasury bills also added significantly to debt costs. Interest payments on treasury bills surged to N536.05 billion in March from N394.16 billion in February, bringing total treasury bill interest to around N1.81 trillion during the period. The data underscores the high cost of short-term borrowing in Nigeria’s tight liquidity environment, with other instruments such as Sukuk, green bonds, and savings bonds contributing smaller amounts.

Monthly trends reveal March as the peak month for domestic debt servicing at N1.30 trillion, followed by February at N1.03 trillion and September at N998.28 billion. Economists warn that such elevated borrowing costs are crowding out critical capital expenditure and social spending, as interest payments continue to outpace revenue growth. Promissory note repayments and principal outlays, though lower than interest costs, added to the fiscal pressure.

The DMO reported that Nigeria’s domestic debt stock rose by N7.40 trillion in the first nine months of 2025, from N70.41 trillion at the end of 2024 to N77.81 trillion by September 30. FGN bonds dominated the debt portfolio, increasing from N55.44 trillion to N61.99 trillion, while treasury bills and other instruments grew more modestly. Experts caution that without careful debt management, rising domestic debt could further strain government finances and limit investments in social infrastructure.

source: leadership