Nigeria's total debt service has seen a dramatic escalation, reaching N16.26 trillion in 2025, a substantial rise from N7.79 trillion recorded in 2023. This surge has occurred predominantly under the administration of President Bola Ahmed Tinubu, with quarterly debt service remaining elevated since Q3 2023.
The Debt Management Office (DMO) data reveals a consistent upward trend in quarterly debt payments, culminating in a record N4.86 trillion in the fourth quarter of 2025. This figure represents a 37.86% increase from N3.52 trillion in Q3 2025 and a 49.93% jump from N3.24 trillion in Q4 2024.
A comparative analysis of Nigeria's debt service trajectory before and during the current administration indicates a significant structural shift. Prior to Q3 2023, quarterly debt service typically ranged between N330.82 billion and N1.24 trillion, averaging N753.05 billion, with external debt service remaining relatively low.
However, since Q3 2023, quarterly debt service has jumped to a new range of N2.46 trillion to N4.86 trillion, with an average of N3.47 trillion per quarter. External debt service has also surged into the trillion-naira range, exceeding N1 trillion in all quarters except Q4 2023, and reaching a peak of N2.57 trillion in Q4 2025.
The pivotal shift occurred in Q3 2023 when external debt service increased by 270.78% quarter-on-quarter, leading to a 234.78% rise in total debt service. This marked a departure from previous trends and set the stage for the sustained high levels of debt payments.
External debt has been a primary driver of this increase. In Q4 2025, external debt service stood at N2.57 trillion, surpassing domestic debt service of N2.28 trillion. This pushed the share of external debt to 53% of the total, up from 43% in Q3 2025.
While exchange rate fluctuations have amplified debt servicing costs, the data suggests that the volume of repayments, rather than solely exchange rate pressure, drove the Q4 2025 spike. The naira moved from N755.27/$ in Q3 2023 to N1,429/$ in Q4 2025, but the debt repayment surge occurred despite a slight appreciation from N1,478/$ in the prior quarter.
The sustained increase in debt service since Q3 2023 underscores growing fiscal pressure, with a larger portion of government resources now allocated to debt obligations. In 2024, total federal government revenue was N20.98 trillion, while total debt service reached an estimated N12.74 trillion, resulting in a debt service-to-revenue ratio of approximately 60.73%.
This ratio, derived from the Budget Office of the Federation's (BOF) 2026 – 2028 Medium Term Expenditure Framework and Fiscal Strategy Paper, indicates that debt service consumed 36.94% of the total government expenditure of N34.49 trillion in 2024.
Projections for 2025 suggest an even tighter fiscal situation. With annualized revenue estimated at N23.43 trillion and debt service at N16.26 trillion, Nigeria is projected to spend N6.94 out of every N10 earned on debt service, or 69.41% of its revenue. This highlights the strain on fiscal sustainability and limits the government's capacity for growth-enhancing investments.
The increasing dominance of external debt also introduces additional risk, as repayments necessitate foreign exchange, thereby increasing the economy's exposure to global financial conditions.
