The Federal Authorities of Nigeria (FG) has borrowed a complete of N6.17 trillion from the home debt market inside the first six months of 2025, knowledge from the Debt Administration Workplace (DMO) reveal.
The borrowings had been primarily raised by means of Federal Authorities Bonds (FGN Bonds), Nigerian Treasury Payments (NTBs), and Promissory Notes (P-Notes), which represent a part of the nation’s complete home debt construction.
The DMO’s knowledge present that N4.48 trillion was raised within the first quarter of 2025, adopted by an extra N1.70 trillion within the second quarter, a modest 2.26% improve over the previous interval.
This introduced the entire home borrowings as of June 30, 2025, to N76.59 trillion.
With oil manufacturing nonetheless under the 1.8 million barrels per day benchmark and non-oil revenues underperforming, the federal government has more and more turned to the debt market to maintain its spending commitments.
Based on the federal government’s Medium-Time period Expenditure Framework (MTEF), it plans to boost over N13 trillion from the home market in 2025 to bridge its price range deficit — a goal which may be exceeded if borrowing continues on the present tempo.
Bonds stay the popular borrowing instrument
Nairametrics evaluation of the DMO knowledge on home borrowing reveals that FGN Bonds stay the spine of Nigeria’s home debt technique, accounting for practically 80% of complete borrowings.
As of June 2025, FGN Bonds stood at N60.65 trillion, comprising Naira-denominated bonds (N36.52 trillion), Securitised Methods and Means Advances (N22.72 trillion), and US Greenback bonds valued at N1.40 trillion.
- The Methods and Means Advances, a controversial facility beforehand prolonged by the Central Bank of Nigeria (CBN) to the Federal Authorities, had been securitised into long-term bonds in 2024, including important weight to the home debt portfolio.
- The DMO clarified that the bond figures exclude N680.42 billion issued to restructure states’ industrial money owed however embody the restructured Methods and Means element.
- Treasury Payments additionally maintained a considerable share, standing at N12.76 trillion or 16.67% of complete borrowings within the interval beneath overview. Analysts notice that the surge in T-Invoice issuances displays the federal government’s technique to draw short-term liquidity whereas managing rollover dangers in an surroundings of elevated yields.
Different devices, corresponding to FGN Sukuk (N1.29 trillion), Financial savings Bonds (N91.53 billion), Inexperienced Bonds (N62.35 billion), and Promissory Notes (N1.73 trillion) make up the rest of the portfolio, indicating a deliberate diversification of funding sources to cater to completely different investor classes. Notably, the Promissory Notes, each Naira and overseas currency-denominated, symbolize 2.26% of complete home borrowing and are non-interest-bearing devices used to settle authorities arrears and contractor obligations.
Borrowing developments mirror fiscal pressure, market confidence
Past the headline figures, the borrowing sample paints an image of a authorities grappling with tight fiscal circumstances but benefiting from investor confidence in sovereign devices. The home debt inventory rose from N74.89 trillion as of March 31, 2025, to N76.59 trillion by June 30, 2025, signaling an incremental improve of N1.70 trillion.
Based on Cordros Capital, the rise in home debt mirrors the broader pattern in complete public debt, which climbed 2% quarter-on-quarter to N152.4 trillion in Q2 2025 from N149.39 trillion in Q1.
Of this complete, home debt accounted for 52.9%, whereas exterior debt represented 47.1%, estimated at USD46.98 billion. The marginal improve in exterior debt was attributed to recent disbursements from the World Bank (USD1.15 billion) and the African Improvement Bank (USD12.14 million).
The Lagos-based analysis and funding advisory agency famous that in Naira phrases, exterior debt rose 1.7% q/q to N71.85 trillion, utilizing the common trade charge of N1,529.21/USD in Q2. On a year-on-year foundation, Nigeria’s complete debt inventory expanded by a staggering 113.5%, largely as a result of naira’s depreciation and better home issuances.
Whereas the growth in borrowing has drawn criticism from fiscal conservatives, analysts argue that it underscores the resilience of Nigeria’s home capital market. The sustained subscription to authorities securities, regardless of rising yields and inflationary pressures, displays traders’ desire for comparatively protected devices in a risky macroeconomic surroundings.
Sustainability considerations and coverage implications
Nigeria’s rising debt pile raises renewed considerations about fiscal sustainability and debt servicing prices, which already eat a big portion of presidency income.
- With complete public debt projected by Cordros Capital to succeed in N152.11 trillion by year-end, representing 35.5% of GDP, policymakers face mounting strain to strike a steadiness between fiscal stimulus and long-term stability.
- The securitisation of the Methods and Means advances has supplied short-term aid by restructuring the federal government’s overdrafts into long-term debt.
- Nonetheless, the structural imbalance between recurrent expenditure and income technology stays unaddressed.
- Analysts have famous that continued borrowing has crowded out non-public sector credit score, stifling financial restoration, and urging the federal government to curtail non-productive spending.
- Furthermore, rising yields on FGN Bonds — now averaging between 18% and 21% throughout maturities — translate into increased debt servicing obligations.
- In an surroundings the place inflation hovers round 23% and actual rates of interest stay adverse, the federal government’s skill to handle refinancing dangers might be essential to sustaining market stability.
Nonetheless, the home market stays a lifeline for Nigeria’s fiscal operations. By avoiding extreme publicity to risky overseas trade circumstances, native borrowing gives a comparatively secure mechanism for funding authorities applications and infrastructural commitments. The current issuance of Sukuk and Inexperienced Bonds additional alerts the administration’s intent to align debt devices with sustainability and moral funding targets.
Balancing borrowing with reform
Preliminary estimates recommend that the federal government might have borrowed an extra N3 trillion, bringing complete home borrowing in 2025 to almost N9 trillion.
Fiscal watchers argue that transparency within the utilisation of those funds is essential. Borrowing to finance deficits is just not inherently problematic, they notice, supplied the proceeds stimulate progress, create jobs, and generate future income streams.
“The query as as to whether the federal government’s borrowing trajectory aligns with fiscal prudence or deepens Nigeria’s debt vulnerability is determined by how, successfully or in any other case, borrowed funds are deployed in productive sectors that can yield tangible returns or advantages that uplift the macro financial system. There is no such thing as a drawback with borrowing if borrowed funds are correctly utilized,” stated the MD/CEO of Maxfund Africa Restricted, Mr. Charles Fakrogha.
“Little doubt the federal authorities is enterprise mega infrastructure initiatives and the financial system is responding positively to reforms, as the newest financial numbers from the statistics workplace present. My expectation is that every one these will ultimately give rise to important progress,” he added.
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