Nigeria Debt Crisis Deepens as Servicing Costs Hit N15.81tn, Sparks Fiscal Discipline Calls

Nigeria’s growing debt burden is once again raising alarm across economic and policy circles, as rising debt servicing costs continue to consume a large share of government revenue. Analysts warn that the trend is putting intense pressure on public finances and limiting the government’s ability to fund critical infrastructure and development projects.

According to projections in the 2026 budget, Nigeria’s debt servicing is expected to reach N15.81 trillion. This has intensified calls for stronger fiscal discipline, more efficient spending, and a shift toward alternative funding models such as public-private partnerships (PPPs) to ease the country’s widening fiscal strain.

A report by civic organisation BudgIT highlights the severity of the situation, noting that Nigeria’s total public debt surged from N33.13 trillion in 2021 to about N149.29 trillion by mid-2025. The report also warns that debt servicing has grown sharply, with the debt service-to-revenue ratio peaking at 83.62 percent in Q2 2025—far above international safety thresholds for low-income economies.

Economists and policy experts say the situation is becoming increasingly unsustainable. Muda Yusuf of the Centre for the Promotion of Private Enterprise (CPPE) described the trend as a structural challenge, warning that high borrowing costs and recurring deficits are trapping the government in a cycle of debt dependence. He stressed the need to reduce wasteful spending and expand private sector participation in infrastructure delivery.

While concerns remain high, some analysts believe there may be a gradual easing of pressure if revenue improves and oil prices remain above budget benchmarks. However, experts agree that without urgent reforms in spending discipline, revenue generation, and borrowing strategy, Nigeria risks deeper fiscal strain that could slow economic growth and crowd out private investment.

source: Business day