Nigeria spends N4.14 trillion more on debt service than infrastructure

Nigeria incurred N10.61 trillion in additional debt-service costs between June 2023 and December 2025, about N4.14 trillion more than the N6.47 trillion spent on strategic infrastructure development over the same period.

This is according to the Federal Government’s Nigeria’s Reform Scorecard: The Benefits, Costs and Harms Prevented, released by the Federal Ministry of Finance on Wednesday.

An analysis of the expenditure data shows that external debt service arising from exchange-rate depreciation amounted to N9.37 trillion, while the impact of higher monetary policy rates on domestic debt service added another N1.24 trillion.

Combined, the N10.61 trillion debt-service cost was about 64% higher than spending on strategic infrastructure. This translates to roughly N1.64 spent on additional debt-service costs for every N1 committed to strategic infrastructure.

What the scorecard shows

Debt service represented about 34.6% of the government’s total incremental expenditure of N30.64 trillion, compared with 21.1% for strategic infrastructure.

The figures highlight the fiscal cost of the economic reforms implemented since 2023, particularly the depreciation of the naira following foreign exchange market reforms and higher interest rates resulting from monetary tightening.

At a briefing in Abuja on Wednesday, the Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, acknowledged that the reforms had imposed substantial costs.

• “Those decisions came at a real cost, and we are not here to pretend otherwise. Prices rose. The naira adjusted sharply. Households and businesses felt it, and many still do,” he said.

External debt service accounted for the bulk of the additional debt burden, making up about 88.3% of the combined N10.61 trillion.

• At N9.37 trillion, the exchange-rate-related external debt cost alone exceeded strategic infrastructure expenditure by approximately N2.90 trillion, or 44.9%.

The government attributed this to the depreciation of the naira, which increased the local-currency amount required to service foreign-currency obligations.

• According to the scorecard, the official exchange rate moved from around N460/$ in May 2023 to about N1,358/$ in August 2026.
• Domestic debt also became more expensive following monetary tightening. The government attributed N1.24 trillion in additional domestic debt-service costs to increases in the Monetary Policy Rate, which rose from 18.5% in May 2023 to 26.5%.

Oyedele said the N9.37 trillion external debt-service cost was made necessary by exchange-rate depreciation and ranked as the second-largest incremental expenditure item, behind wage adjustments and ahead of infrastructure.

Spending hits N30.64 trillion

Total incremental expenditure stood at N30.64 trillion, with wage adjustments taking the largest share at N9.39 trillion.

• External debt service followed at N9.37 trillion, while N6.47 trillion went to strategic infrastructure. Electricity subsidy costs accounted for another N3.14 trillion, domestic debt service N1.24 trillion and social welfare transfers N423.80 billion.

However, when external and domestic debt-service costs are combined, the debt bill rises to N10.61 trillion, making debt servicing the largest overall component of the Federal Government’s incremental expenditure at about 34.6% of the total.

• Meanwhile, the Federal Government generated N20.4 trillion in incremental resources, comprising N11.9 trillion from borrowing, N5.4 trillion from its share of subsidy savings and N3.1 trillion from other revenue. Borrowing therefore represented about 58% of the additional resources.
• About N20.40 trillion, or two-thirds of the N30.64 trillion spending, was financed from these incremental resources, while the remaining N10.24 trillion was absorbed by the existing revenue base.

Despite the higher nominal debt-service costs, the government argues that Nigeria’s overall fiscal sustainability has improved.

The scorecard projects the debt-service-to-revenue ratio at about 50% in 2026, compared with approximately 100% in 2022. It estimates that without the reforms, the ratio could have reached between 100% and 200%.

What you should know

Nairametrics earlier reported that the Federal Government borrowed N11.9 trillion between June 2023 and December 2025, but says the amount would have been significantly higher without the fiscal space created by its economic reforms.

• Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this while presenting the government’s reforms scorecard.
• He said the government’s incremental resources from subsidy savings, independent revenues and additional borrowing amounted to N20.4 trillion during the period, while incremental expenditure by the Federal Government stood at N30.64 trillion.

Oyedele said the N11.9 trillion in additional borrowing helped fund government expenditure during the period, but argued that the reforms had prevented borrowing from becoming more destabilising.