The President Bola Tinubu-led Nigerian government’s domestic debt service has witnessed a significant surge, rising by 65% quarter-on-quarter (QoQ) to N2.6trillion in the first quarter of 2025, according to data released by the Debt Management Office (DMO).
This represents a staggering 164% year-on-year (YoY) increase, underscoring the persistent fiscal strain faced by the government.
“The upward trend in domestic debt servicing underscores the persistent fiscal strain faced by the government, largely stemming from continued revenue underperformance,” the DMO report noted.
The sharp increase was primarily driven by a marked rise in the value of Nigerian Treasury Bills (NTB), which more than doubled to N961 billion compared to N374 billion in the previous quarter. Consequently, the share of NTB increased to 36.8% from 23.7% in Q4 2024.
Interest payments on FGN bonds, which accounted for 54% of total debt service cost, were another contributing factor. The value of FGN bonds increased by 47% year-on-year to over N1.4 trillion.
There was also an interest payment of almost N68 billion on FX-denominated domestic bonds during the quarter.
Looking ahead, the Debt Management Office expects interest payments to continue to consume a significant portion of the Federal Government’s revenue, potentially exerting mounting pressure on fiscal sustainability.
While proposed tax reform bills are expected to enhance domestic revenue mobilisation over the medium term, their impact may not be immediate due to the scheduled implementation timeline, which defers key measures until 2026.
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