Nigeria’s federal government, under the administration of Bola Tinubu, is on course to spend more than N91 trillion on debt service between 2023 and 2028.
The size of debts highlights the mounting cost of public borrowing amid persistently weak revenue performance.
This estimate is based on a review of debt service provisions in the 2023 and 2024 budgets, the 2025 Appropriation Act, and forward projections contained in the Medium-Term Expenditure Framework (MTEF) for 2026–2028.
The scale of projected debt service also reflects a combination of rising fiscal deficits, a rapidly expanding debt stock, and elevated interest rates—conditions that have intensified since 2023.
What the data is saying
Federal Government debt service obligations have risen sharply in both budgeted and actual terms.
- In 2023, the government budgeted N6.56 trillion for debt service but ended the year having spent N8.56 trillion, overshooting the target by about N2 trillion.
- The pattern worsened in 2024, when budgeted debt service of N8.27 trillion ballooned to an actual outturn of N12.63 trillion.
- For 2025, the government has budgeted N14.32 trillion for debt service.
- However, by the end of the first seven months, actual debt service incurred had already reached N9.8 trillion, exceeding the pro-rated target of N8.35 trillion.
If this trajectory holds, actual spending will once again surpass the full-year estimate.
- Looking ahead, the MTEF projects debt service of N15.9 trillion in 2026, rising further to N19.8 trillion in both 2027 and 2028.
- Taken together, total budgeted debt service for the six-year period stands at N84.6 trillion, but past experience suggests the eventual figure could exceed N91 trillion.
Capital expenditure squeezed
While the government plans to spend N114.8 trillion on capital expenditure over the same period, actual capital releases have consistently fallen behind debt service payments.
- In 2023, capital spending came in at N6.3 trillion, significantly lower than the N8.56 trillion spent on debt service.
- The gap widened in 2024, when capital expenditure again lagged debt service by N11.5 trillion, as interest and principal repayments consumed a growing share of government resources.
- The situation has deteriorated further in 2025. Pro-rated capital expenditure for the first seven months stands at just N3.59 trillion, compared with a pro-rated budget expectation of N13.6 trillion.
This suggests that capital projects are once again bearing the brunt of fiscal pressure as debt obligations take priority.
Revenue weakness
Nigeria’s rising debt service burden is fundamentally linked to weak and volatile government revenues, which have failed to keep pace with spending ambitions.
- In 2023, actual revenue of N12.48 trillion slightly exceeded the budget. However, the improvement proved short-lived.
- In 2024, actual revenue fell to N20.98 trillion, undershooting the budget by nearly N5 trillion and forcing the government to borrow more to bridge the gap.
- For 2025, early indicators are troubling. Pro-rated actual aggregate revenue for the first seven months is estimated at N13.6 trillion, far below the pro-rated budget expectation of N23.8 trillion.
If this trend persists, Nigeria risks ending the year with a significantly higher debt service-to-revenue ratio, a key signal of fiscal stress.
Rising debt and high interest rates
Beyond revenue shortfalls, Nigeria’s debt service costs are being amplified by a growing debt stock and elevated borrowing costs.
- Domestic debt has expanded from N54.3 trillion in 2022 to N80.5 trillion, reflecting increased reliance on local borrowing.
- External debt has also risen, climbing from $41.6 billion to $46.9 billion, adding foreign exchange exposure to servicing obligations.
- At the same time, the Central Bank of Nigeria’s prolonged hawkish monetary stance has pushed government borrowing rates above 20% in recent years.
This significantly increases interest costs on new and refinanced debt.
Significance of these trends
Nigeria is increasingly locked into a fiscal structure where debt service grows faster than revenue.
Thus, crowding out capital spending and limiting the government’s ability to invest in infrastructure, healthcare, education, and productivity-enhancing sectors.
Unless revenue reforms deliver sustained gains—or borrowing costs fall meaningfully, debt service is likely to remain the single largest claim on public finances throughout the current administration’s tenure.
