Nigeria Economic Update, Issue 40

Data from the National Bureau of Statistics (NBS) show that Nigeria’s public debt stock, which includes external and domestic debt, stood at ₦149.38 trillion in the first quarter of 2025, indicating a growth of 3.27% quarter-onquarter from ₦144.66 trillion in Q4 2024. Total external debt stood at ₦70.63 trillion, while total domestic debt stood at ₦78.75 trillion in Q1 2025. The share of domestic debt to total public debt recorded the highest percentage, standing at 52.72%, while external debt accounted for 47.28% of total public debt in Q1 2025. State-wise, Lagos State recorded the highest domestic debt at ₦874.03 billion, followed by Rivers with ₦364.39 billion. Meanwhile, Jigawa and Ondo states recorded the lowest domestic debt stocks at ₦1.06 billion and ₦11.76 billion, respectively. The increase in debt stock occurred as a result of the depreciation of the Naira, which inflated the values of local currency borrowing and new borrowings from the federal government, intended for funding public expenditure. Rising debt stock implies increasing debt servicing costs, which strain government finances, especially as Nigeria makes efforts to stabilise the Naira and improve foreign exchange liquidity. Furthermore, while heavy reliance on domestic borrowing may reduce external vulnerability, it can crowd out private investments and push up domestic interest rates. Therefore, there is a need for the government to enhance debt management frameworks and control borrowing at both the federal and state levels. Furthermore, borrowings should be channelled toward growth-enhancing and revenue-generating projects, especially in productive sectors such as energy and manufacturing.  

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