Nigeria’s Public Debt Explained: N159.35trn, and the Number That Actually Matters

Nigeria’s total public debt stood at ₦159.35 trillion at the end of March 2026, according to the Debt Management Office. Three months earlier it was ₦159.28 trillion. On the face of it, almost nothing happened.

That reading is wrong, and the reason is the exchange rate. Measured in dollars, the same debt went from 110.97 billion to 114.95 billion over the quarter. A stronger naira shrank the local-currency value of the external half of the portfolio and flattened the headline. The debt grew. The currency hid it.

Year on year the movement is plainer: ₦149.39 trillion in March 2025 to ₦159.35 trillion in March 2026, an increase of ₦9.96 trillion or 6.67 per cent.

The stock figure is also the least useful number in the file. What determines whether Nigeria is in trouble is not how much it owes but how much of what it collects goes to servicing that debt, and that ratio has been moving in one direction for three years.

What the ₦159.35 trillion is made of

The portfolio splits almost evenly, with domestic borrowing slightly ahead.

These are consolidated figures. They cover the Federal Government, the 36 states and the Federal Capital Territory. Anyone comparing debt numbers across years needs to check four things first: the reporting date, the exchange rate used to convert the external portion, which tiers of government are included, and whether sub-national guarantees are counted. Two honest reports can differ by trillions on those choices alone.

The number that actually matters

Debt stock is the sum of everything outstanding. Debt service is the cash that leaves the treasury this year to pay interest, fees and maturing principal. A country can carry a large stock comfortably if it is long-dated and cheap, and choke on a smaller stock that is short-dated and expensive.

Nigeria’s problem is the second kind. In the first quarter of 2026 alone, the Federal Government spent ₦3.14 trillion servicing domestic debt, up 20.3 per cent on the same quarter of 2025. External debt service went the other way, falling to 954 million dollars for the quarter.

Across the full year, debt servicing is projected at about 11.6 billion dollars, roughly 130 per cent higher than 2025.

Set that against revenue and the picture sharpens. Interest payments alone are expected to absorb 53.7 per cent of government revenue in 2026. The comparable figure was 40.8 per cent in 2024 and 53.2 per cent in 2025. More than half of every naira collected is spoken for before a single road, clinic or classroom is funded.

Why debt-to-GDP is the wrong yardstick here

Nigeria’s debt-to-GDP ratio is projected at about 32.3 per cent for 2026, down from 35.9 per cent at the end of 2025. By international standards that is comfortable. Plenty of economies carry twice as much.

The ratio flatters Nigeria because GDP is not what pays creditors. Revenue is. GDP measures everything produced in the country; the government only ever collects a slice of it, and Nigeria’s slice is unusually thin. A country with a modest debt-to-GDP ratio and a weak tax take can be under more strain than a heavily indebted one that collects efficiently.

The IMF has framed it the same way. It rates Nigeria’s risk of sovereign debt distress as moderate, while pointing out that the real vulnerability is the interest-to-revenue ratio rather than the size of the debt stock. That is why the fiscal conversation has shifted from debt-to-GDP to debt service-to-revenue.

It also explains why revenue reform has become the debt strategy. Widening non-oil tax compliance, modernising customs, closing leakages and removing costly subsidies all reduce the debt burden without repaying a naira of principal, because they enlarge the denominator. Q2 2026 growth of 4.43 per cent helps for the same reason.

Who Nigeria borrows from, and on what terms

Domestic borrowing is raised in naira from banks, pension funds, insurers, asset managers and retail investors. It carries no exchange rate risk, which is its main attraction, and higher interest rates, which is its main cost.

FGN Bonds run from five to thirty years and set the benchmark yield curve for the whole domestic fixed income market. Nigerian Treasury Bills, managed with the CBN at 91, 182 and 364 days, handle short-term cash flow and banking system liquidity. Around those sit the specialised instruments: FGN Sukuk, which is asset-backed and ring-fenced for specific road corridors, Sovereign Green Bonds for climate projects, and FGN Savings Bonds aimed at retail savers. Promissory notes are used to settle verified arrears to contractors and states without an immediate cash outflow.

External debt comes in three grades. Multilateral loans from the World Bank’s IDA and IBRD windows and the African Development Bank are the cheapest, with long moratoriums and nominal interest. Bilateral loans are government to government, with China Exim Bank, the Japan International Cooperation Agency, France’s AFD and Germany’s KfW financing named rail, port, airport and power projects. Commercial debt means Eurobonds, which bring in foreign currency quickly and expose the country to rating agencies and global investor sentiment.

Currency movement runs through all of this. When the naira weakens, the naira cost of servicing dollar debt rises automatically even though the principal has not changed. When it strengthens, as it did in the last quarter, the reverse happens and the headline improves for reasons that have nothing to do with borrowing decisions.

Ways and Means, and what securitisation changed

Ways and Means advances are the overdraft the Central Bank extends to the Federal Government to bridge gaps between when money is spent and when revenue arrives. Section 38 of the CBN Act 2007 caps them at five per cent of the previous year’s actual collected revenue and requires repayment within the same financial year.

Those limits were exceeded for years, and the accumulated balance was eventually securitised: converted from short-term central bank advances into long-dated government bonds managed by the DMO.

The conversion made the recorded debt bigger overnight. It did not create new borrowing. It moved an existing liability from an off-ledger overdraft onto the official debt register with a fixed repayment schedule, which is why year-on-year debt comparisons that straddle the securitisation are misleading unless the change is stated.

The statutory machinery behind the borrowing

The Debt Management Office was created by the DMO (Establishment) Act 2003. It keeps the official debt register, issues sovereign instruments, and manages servicing of both domestic and external liabilities under the Federal Ministry of Finance.

Section 41 of the Fiscal Responsibility Act 2007 restricts government borrowing at every tier to capital expenditure and human development. Borrowing to fund recurrent spending is prohibited. The Fiscal Responsibility Commission monitors compliance.

States and the FCT borrow under DMO and Finance Ministry verification rules. A state seeking a federal guarantee for external borrowing has to submit its revenue profile, existing debt service deductions and a repayment capacity audit first. What those same state treasuries pay the officials running them is set separately by RMAFC, and we break it down in how much a Nigerian governor earns.

The DMO runs an annual Debt Sustainability Analysis testing the portfolio against interest rate shocks, refinancing risk and exchange rate movement, and structures maturities to avoid stacking large principal repayments into a single year.

Where to check the numbers yourself

Debt figures circulate faster than they are verified, and most of the disagreement in public debate comes from comparing mismatched sources rather than from the underlying data.

The DMO publishes quarterly reports with total public debt, external debt broken down by creditor, and domestic debt by instrument. The Central Bank supplies monetary aggregates, treasury bill yields and reserve positions. The National Bureau of Statistics provides the GDP and inflation figures needed to compute any ratio.

Reconciling across those three is what separates an analysis from a talking point. For the political argument this data keeps feeding, see Inside Nigeria’s Debt Profile Ruckus, and for the growth projections it is measured against, the Finance Ministry’s $1 trillion economy target.