By John Umeh
Nigeria’s debt burden has deepened as the Federal Government (FG) borrowed a staggering ₦17.36 trillion from both local and foreign lenders in the first ten months of 2025—55.6% above its prorated borrowing target of ₦10.9 trillion, as outlined in the 2025 Appropriation Act. The approved borrowing limit for the entire fiscal year stands at ₦13.08 trillion, but analysts warn that the government may overshoot this figure by nearly 80% before year-end if the current pace continues.
According to data from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN), about ₦15.8 trillion of the total amount was raised from domestic sources, while another ₦1.56 trillion came from external borrowing in the first half of 2025. The government recently intensified its borrowing drive, seeking to raise an additional $2.35 billion (₦3.38 trillion) through a Eurobond issuance, which could push the total borrowing for the year to over ₦20.7 trillion.
Under the 2025 budget, the FG projected total spending of ₦54.99 trillion against expected revenue of ₦41.91 trillion, leaving a planned deficit of ₦13.08 trillion—a gap meant to be filled primarily through loans. However, with borrowing already far exceeding expectations, economists are raising concerns about the sustainability of Nigeria’s fiscal strategy.
Financial analysts warn that the growing debt, coupled with weak revenue inflows, is pushing Nigeria closer to a debt trap. The trend, they say, threatens investor confidence, crowds out private sector access to credit, and fuels inflationary pressure. The IMF has also cautioned that such fiscal expansion undermines efforts at consolidation and long-term debt sustainability.
Experts React
1. Fiscal Indiscipline and Cost of Governance
Economist Andrew Uviase, Managing Partner at Ecovis OUC, described the overshooting of the borrowing target as “a glaring sign of fiscal indiscipline.” He argued that the government’s spending pattern lacks restraint and transparency, making it difficult to control the debt spiral. “The truth is, without strict financial discipline, no amount of borrowing will ever be enough,” Uviase said. He added that sluggish non-oil revenue performance and insecurity across key production zones continue to suppress potential income streams.
2. Unrealistic Revenue Projections
According to David Adonri, Vice Executive Chairman of Highcap Securities, the government’s heavy borrowing stems from overly optimistic revenue assumptions in the 2025 budget—particularly those tied to oil. “The budget was based on unrealistic expectations: an oil price of $75 per barrel and daily output of 2.06 million barrels. In reality, output has hovered around 1.6 to 1.7 million barrels, with prices now near $65,” Adonri noted. He warned that Nigeria’s “addiction to debt” continues to undermine economic recovery and fiscal credibility.
3. Rising Debt Servicing Pressure
Public affairs analyst Clifford Egbomeade attributed the borrowing spike to ballooning debt-service obligations and weak tax revenues. He explained that falling oil production—averaging just 1.35 to 1.4 million barrels per day—and inflation-induced declines in consumer spending have hurt VAT and company income tax collections. “The government has been forced to rely more on the domestic debt market, where yields have exceeded 20% in recent auctions,” he said, noting that high global interest rates have also delayed Nigeria’s external borrowing plans.
Breakdown of Borrowing Instruments
Figures from the DMO show that the FG’s borrowing mix in 2025 has been dominated by short- and long-term debt instruments:
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₦11.43 trillion was raised through Treasury Bills, marking a 4.6% year-on-year increase.
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₦4.04 trillion came from FGN Bonds, a 22% year-on-year decline compared to 2024.
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₦40.19 billion was sourced through the FGN Savings Bond, up 5.6% year-on-year.
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₦300 billion was mobilized via Sukuk Bonds, a notable rise from zero issuance during the same period last year.
Mounting Fiscal Risks
With debt service already consuming a large portion of government revenue, experts caution that the overshoot could worsen Nigeria’s fiscal fragility. The IMF recently warned that the country’s debt-to-revenue ratio—already among the highest globally—poses a major threat to long-term financial stability.
As 2025 draws to a close, the government faces a daunting task: reining in spending, improving non-oil revenue performance, and rebuilding fiscal discipline to prevent what analysts describe as a looming debt sustainability crisis.
