N79.41 trillion has been added to Nigeria’s public debt stock in just three years, taking total obligations to N166.79 trillion as of June 30, 2026 and bringing the country’s debt burden close to twice its level at the beginning of the Bola Ahmed Tinubu administration.
The latest Debt Management Office (DMO) data show that public debt rose by 90.9 per cent, from N87.38 trillion in June 2023 to N166.79 trillion three years later.
From the perspective of the fixed-income market, the latest debt figures point to a continued expansion in sovereign obligations.
Total public debt increased by N14.39 trillion, or 9.4 per cent year-on-year, to N166.79 trillion in June 2026 from N152.40 trillion a year earlier. The quarterly movement was also significant, with the stock rising N7.44 trillion, or 4.7 per cent, from N159.35 trillion in March.
The quarterly increase alone is equivalent to more than N7 trillion added to outstanding public obligations within three months.
For investors, however, the movement in the naira debt stock must be read alongside exchange-rate and accounting effects. A higher naira value of outstanding debt does not necessarily imply that the government raised an equivalent amount in new cash. Foreign-exchange movements, the treatment of Ways and Means advances and securitisation can all influence the reported stock.
The more relevant market question is therefore the underlying financing requirement and its implications for debt service, refinancing and government demand for domestic liquidity.
The progression of Nigeria’s public debt since June 2023 provides perhaps the clearest measure of the fiscal transformation that has taken place during the Tinubu administration.
The DMO’s June 2023 figure of N87.38 trillion has risen to N166.79 trillion by June 2026.
That represents an increase of N79.41 trillion in three years.
The composition of the debt has also changed.At the end of 2023, domestic debt represented about 60.74 per cent of total public debt, while external debt accounted for 39.26 per cent. By June 2026, domestic debt accounted for 54.91 per cent, while external obligations had risen to 45.09 per cent.
The latest portfolio therefore comprises N91.59 trillion in domestic debt and N75.20 trillion in external debt.
In dollar terms, Nigeria’s total public debt stood at approximately $120.93 billion, consisting of about $66.41 billion in domestic obligations and $54.52 billion in external debt.
The DMO used the Central Bank of Nigeria’s official exchange rate of N1,379.1842 per dollar as of June 30, 2026, to convert the external debt component into naira.
The Federal Government of Nigeria remains by far the largest debtor in the public debt portfolio.
According to the DMO’s latest figures, the federal government accounts for N152.77 trillion, representing approximately 91.6 per cent of total public debt.
Of this amount, about N87 trillion is domestic debt, representing 52.16 per cent of total public debt, while N65.77 trillion is external debt, equivalent to 39.44 per cent.
States and the Federal Capital Territory account for the remaining N14.01 trillion, comprising about N4.59 trillion in domestic debt and N9.42 trillion in external debt.
Bonds dominate domestic borrowing
The structure of the federal government’s domestic debt provides another insight into the country’s financing strategy.
FGN bonds remain the dominant component, accounting for N64.84 trillion, or 74.53 per cent, of Federal Government domestic debt.
Within this category, FGN naira bonds account for N41.47 trillion, while securitised Ways and Means advances amount to about N22.11 trillion.
The Federal Government also has about N1.27 trillion in domestic dollar bonds.
Treasury Bills account for N19.48 trillion, representing 22.39 per cent of FGN domestic debt.
Other instruments include N1.19 trillion in FGN Sukuk, N122.45 billion in savings bonds, N47.36 billion in green bonds, and approximately N1.22 trillion in promissory notes.
The promissory-note balance consists of about N206.82 billion in naira-denominated obligations and approximately N1.01 trillion in foreign-currency obligations.
The government also has about N100 billion in UFTF FGN securities.
Debt service is becoming the bigger story
Debt accumulation tells only half the fiscal story; the other half is the price Nigeria pays to carry those obligations. That price has been rising.
Federal government domestic debt service increased to N3.14 trillion in Q1 2026, compared with N2.61 trillion in Q1 2025, representing a 20.3 per cent year-on-year increase.
Interest payments accounted for almost the entire burden, rising by 25.4 per cent to N2.97 trillion, even as principal repayments declined.
The development explains why debt sustainability cannot be assessed simply by looking at the size of the outstanding debt. The interest rate attached to that debt, its maturity structure and the cost of refinancing are equally important.
When borrowing costs are high, the government can face increasing debt-service obligations even without undertaking an equivalent amount of fresh borrowing.
The result is a fiscal squeeze in which a larger proportion of government revenue is absorbed by existing liabilities, potentially leaving less room for infrastructure, social spending and other productive investments.
The seriousness of the issue was underscored by President Tinubu himself in May 2026 when he said Nigeria expected to spend about $11.6 billion on debt servicing during 2026, a sum he said would amount to nearly half of projected revenue.
The President also argued that high borrowing costs were crowding out spending on infrastructure, healthcare, education and industry. That statement placed the debt question within a wider fiscal context.
For Nigeria, the concern is not simply whether it can continue borrowing. It is whether increasing debt-service commitments will leave sufficient resources for the government to finance the investments required to expand productive capacity. This creates a difficult policy trade-off.
Borrowing can provide the government with the resources to invest ahead of revenue growth. But if borrowed resources do not generate sufficient economic returns, the government is left with the liability without the corresponding expansion in its repayment capacity.
Experts question what Nigeria is borrowing for
That issue has been repeatedly raised by economists and financial-market analysts.
The central argument from several experts has not been that borrowing is inherently wrong.
Rather, they have questioned whether Nigeria’s borrowing is sufficiently connected to projects and investments capable of generating economic activity, additional revenues and foreign exchange.
Uche Uwaleke, president of the Association of Capital Market Academics of Nigeria, has argued that government borrowing can be justified when the projects being financed are clearly identified and capable of supporting repayment.
His emphasis has been on the quality of expenditure.
The question, in his view, is whether borrowed funds are being channelled into self-liquidating projects or activities capable of producing returns that strengthen the government’s repayment capacity.
Uwaleke has also advocated greater use of project-linked and potentially cheaper financing instruments, including Sukuk, particularly where infrastructure projects can be tied directly to the financing structure.
The same concern has been raised by Bismarck Rewane, managing director of Financial Derivatives Company (FDC).
Rewane called for strategic government borrowing, arguing that borrowed funds should be channelled towards projects capable of generating revenue and producing broader economic benefits.
David Adonri, executive vice chairman of Highcap Securities, raised similar concerns.
Adonri argued that the federal government is moving into a debt trap, with borrowing increasingly used to meet existing obligations and finance components of government expenditure.
He warned that a prolonged debt cycle could become damaging to the economy if the borrowed resources failed to generate sufficient returns.
Debt service competes with development
The growing debt-service burden has already become a major feature of Nigeria’s annual budget debate.
In January 2026, concerns were raised over the size of the government’s debt-service allocation relative to spending on critical sectors.
Analysts, including Tilewa Adebajo of CFG Advisory, described the rising debt-service burden as a major fiscal concern.
The underlying issue is one of opportunity cost. Every naira committed to interest payments is a naira that cannot simultaneously be used for roads, power, hospitals, schools or industrial incentives.
That does not mean debt service should be avoided. Analysts argue that the government must honour its obligations to maintain credibility in domestic and international capital markets.
They noted further that the government must ensure that new borrowing is undertaken only when the expected economic benefits justify the future claims on government revenue.
Debt sustainability moves from stock to returns
For investors assessing Nigeria’s fiscal outlook, the N166.79 trillion public debt stock is only the starting point. The more consequential question is whether the assets and economic activity financed by that debt are generating returns capable of supporting future repayment.
The distinction is critical. Debt-funded infrastructure, energy projects, transport networks, industrial investments and agricultural infrastructure can potentially expand the economy’s productive base and, over time, strengthen government revenues.
Debt used primarily to finance recurrent expenditure does not necessarily create the same repayment capacity. That makes the return on borrowed capital an increasingly important variable in assessing Nigeria’s fiscal sustainability.
The issue, therefore, is less about whether the sovereign should borrow and more about the cost of capital relative to the economic return generated by the borrowing.
Currency risk enters the equation
The structure of the debt portfolio adds another layer to the assessment.
Domestic debt accounted for 60.74 per cent of total obligations at the end of 2023, compared with 39.26 per cent for external debt. By June 2026, the domestic share had fallen to 54.91 per cent, while external debt had risen to 45.09 per cent.
The greater external component may diversify funding sources and provide access to longer-tenor financing. But it also increases sensitivity to exchange-rate movements.
For investors, therefore, debt composition must be assessed alongside maturity, coupon costs, refinancing exposure and the currency denomination of government revenue.
A debt portfolio cannot be considered sustainable merely because one component is larger than another.
The fiscal variables to watch
According to analysts, the next phase of Nigeria’s fiscal management will be determined by the interaction between debt accumulation, revenue growth and economic returns.
If revenue mobilisation improves faster than debt-service obligations, fiscal space can widen. If debt service rises faster than revenues, resources available for infrastructure and other productive spending will come under greater pressure.
That makes revenue mobilisation, debt-service ratios, domestic borrowing costs, external debt exposure and capital expenditure key measures of the fiscal position.
The returns generated by government-funded projects will be equally important because they determine whether today’s borrowing contributes to tomorrow’s productive capacity and revenue.
Investors will read these indicators as signals of sovereign risk and future borrowing requirements.
Businesses will feel the effects through liquidity and credit conditions, particularly if increased government borrowing puts upward pressure on domestic funding costs.
For the government, the challenge is to maintain fiscal discipline while preserving the investment pipeline needed to generate stronger economic growth and future revenues.
The N166.79 trillion debt stock therefore represents more than the accumulation of past financing decisions. It is considered a forward-looking question about the capacity of the economy to generate the resources required to service those obligations.
