In an astonishing turn of events, Nigeria’s public debt has surged, now reaching an unprecedented ₦27.72 trillion, marking an eye-watering 22.8% increase compared to the ₦121.67 trillion recorded during the same timeframe last year. This staggering growth invites immediate scrutiny: What are the driving forces behind this rapid expansion?
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According to the most recent figures from the Debt Management Office (DMO), the nation’s total debt has climbed by ₦4.72 trillion, or 3.3%, rising from ₦144.67 trillion at the conclusion of December 2024. This trajectory raises vital questions about the long-term sustainability of such debt levels and the measures needed to manage it effectively.
Nigeria’s mounting public debt is largely attributed to both domestic and external borrowing, employed to bridge budgetary gaps. Unfortunately, this issue has been further exacerbated by the declining value of the naira, which has affected the valuation of external debt. Is this an inevitable consequence of economic policies, or are there more profound systemic issues at play?
Exploring the Impact of ₦70.63 Trillion Debt on Currency
The current financial landscape paints a concerning picture: Nigeria’s external debt has ballooned to ₦70.63 trillion as of Q1 2025, an increase from ₦56.02 trillion in the same period last year. This reflects a staggering rise of ₦14.61 trillion, or 26.1%, within a single year. It’s a question worth pondering: How does a nation balance growth with the risks associated with such immense borrowing?
While the growth appears pronounced on a yearly basis, the quarterly figures reveal a more tempered picture, with external debt rising by a modest ₦344 billion from ₦70.29 trillion at the end of the previous year. This contrast begs the question: Do these figures tell the whole story, or is there more beneath the surface?
A striking point of consideration is the widening gap between the growth rates of the dollar and the naira in relation to debt figures. Although the dollar-denominated debt saw an increase of only $3.86 billion, the naira equivalent surged dramatically due to currency depreciation and ongoing servicing costs. How does this affect confidence in Nigeria’s economy, and what can be done to stabilize the naira?
Reports confirm that in Q1 2024, the Central Bank of Nigeria utilized an exchange rate of ₦1,330.26/$1. While the official rate for Q1 2025 remains undisclosed, the soaring figures in naira terms underscore a potentially alarming erosion of currency value. It leaves us pondering: Will the government intervene, or are we witnessing a gradual decline into deeper economic woes?
The sharp increase in the nation’s debt is, in part, attributed to loans secured from multilateral lenders, bilateral partners, and commercial creditors—including influential players like the World Bank and Eurobond holders. With each new loan, the cost of servicing these debts in local currency terms escalates. Is Nigeria caught in a trap of borrowing?
This mounting debt burden has implications far beyond mere numbers; it directly hampers the country’s ability to fund critical development projects. A significant portion of revenue is increasingly diverted to repay interest and principal on existing loans, leaving little room for growth-oriented investments. What does this mean for future generations?
Domestic Debt Approaching ₦79 Trillion
Recent data suggests that Nigeria’s domestic debt is not lagging behind; it has reached ₦78.76 trillion (approximately $51.26 billion) as of March 2025, registering a record increase of ₦13.11 trillion or 20% when compared to ₦65.65 trillion a year prior. On a quarterly basis, this represents a growth of ₦4.38 trillion or 5.9% from ₦74.38 trillion in December 2024. With such rapid growth, what implications might this have for Nigeria’s future economic landscape?
Interestingly, the Nigerian federal government accounts for the lion’s share of this domestic debt, totaling ₦74.89 trillion ($48.73 billion). In contrast, the 36 states and the Federal Capital Territory (FCT) collectively owe ₦3.87 trillion ($2.52 billion), suggesting a slight decrease from ₦4.07 trillion in Q1 2024. This raises questions about governance and fiscal responsibility: Are states becoming more judicious in their borrowing practices?
By the first quarter of 2025, Nigeria’s debt portfolio reveals a near-even split, with domestic debt constituting 52.7% and external debt 47.3%. This subtle shift from 2024—when domestic debt made up a larger portion of the total—highlights evolving economic dynamics. As external debts rise, should we be worried about currency vulnerabilities?
Analysts caution that the expanding external debt, particularly when viewed in the context of worsening currency stability, could threaten debt sustainability. The looming specter of rising repayment costs makes it essential to consider: How can Nigeria navigate this precarious debt landscape without compromising future growth?
With the total debt nearing ₦150 trillion ($97.79 billion) amidst sluggish revenue growth and currency volatility, experts are increasingly alarmed. There seems to be a reckless approach to balancing fiscal responsibility with growth. Are decision-makers equipped to make the tough choices ahead?
In conclusion, while the numbers are staggering, they represent more than mere statistics—they encapsulate the struggles, aspirations, and challenges of a nation navigating complex economic waters. As we watch this scenario unfold, it’s vital to engage, to question, and to advocate for sustainable solutions that will benefit not only the present but future generations as well.
Edited By Ali Musa
Axadle Times International – Monitoring
