By Seun Ibiyemi
Nigeria’s total debt servicing cost rose to about ₦16 trillion in 2025, driven largely by higher domestic interest payments and sustained external debt obligations, according to an analysis of data from the Debt Management Office.
The figure represents an increase of ₦2.98 trillion, or 22.9 per cent, compared to approximately ₦13.02 trillion recorded in 2024, highlighting mounting fiscal pressure on government finances as debt service continues to consume a larger share of revenue.
The analysis showed that domestic debt service rose sharply to ₦8.61 trillion in 2025 from ₦5.87 trillion in 2024, an increase of ₦2.74 trillion or 46.6 per cent.
Domestic obligations accounted for 53.8 per cent of total debt service, making them the primary driver of the overall increase.
Interest payments dominated the structure, accounting for ₦8.24 trillion, or about 95.7 per cent of domestic debt service, indicating that Nigeria’s borrowing burden is heavily weighted toward servicing interest rather than repaying principal.
Federal Government of Nigeria (FGN) bonds contributed about ₦5.35 trillion, representing roughly 65 per cent of domestic interest payments.
Nigeria Treasury Bills also played a significant role, contributing ₦2.55 trillion or about 31 per cent, reflecting increased reliance on short-term borrowing amid tight monetary conditions.
Other instruments such as Sukuk, savings bonds, and green bonds made up a marginal share.
Principal repayments stood at ₦370.93 billion, accounting for just 4.3 per cent of domestic debt service.
On the external side, Nigeria spent $5.15 billion (about ₦7.39 trillion) on debt servicing in 2025, representing 46.2 per cent of total debt service.
This was converted using the Central Bank of Nigeria exchange rate of ₦1,435.2571/$ as at December 31, 2025.
The figure marks an increase from $4.66 billion in 2024 (about ₦7.15 trillion), representing a $493.75 million rise or 10.6 per cent year-on-year.
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External debt service growth remained significantly slower than domestic obligations.
A breakdown showed commercial debt accounting for $2.55 billion (49.6 per cent), driven largely by Eurobond repayments of about $2.49 billion. Multilateral loans stood at $1.996 billion, while bilateral loans accounted for $599.95 million.
Principal repayments made up 59.4 per cent of external debt service, while interest payments accounted for 39.5 per cent.
The data underscores increasing pressure on government finances, with domestic interest payments emerging as the dominant driver of Nigeria’s debt servicing burden amid sustained borrowing and high interest rates.
