Nigeria’s Debt Bill Climbs To N3.14trn In Q1 As External Payments Fall
Ninety five kobo out of every naira the Federal Government spent servicing its domestic debt between January and March 2026 went into interest payments alone, a breakdown of the Debt Management Office’s latest quarterly returns shows, leaving barely a sliver of the N3.14 trillion outlay to actually reduce what the country owes.
The DMO’s domestic debt service report for the first quarter of 2026 puts total payments at N3.14 trillion, made up of N2.97 trillion in interest and N169.68 billion in principal repayments. Interest therefore accounted for about 94.6 per cent of the quarter’s spending, while the entire principal component consisted of repayments on naira denominated promissory notes.
The monthly trajectory tells its own story. The government paid N741.82 billion in January, N967.67 billion in February, then N1.43 trillion in March. The March figure was 47.7 per cent higher than February’s and 92.7 per cent above January’s, meaning a single month absorbed almost half of the entire quarter’s bill. Interest payments alone climbed from N726.38 billion in January to N967.67 billion in February and N1.28 trillion in March, bringing the three month interest total to N2.969 trillion.
Federal Government of Nigeria bonds remained the single heaviest source of the burden, accounting for roughly N1.96 trillion in interest during the quarter. Of that, about N1.90 trillion went on conventional FGN bonds and N61.97 billion on the FGN US Dollar Bond. Nigerian Treasury Bills followed with N1.003 trillion, spread across N262.57 billion in January, N258.90 billion in February and N481.47 billion in March. FGN Savings Bonds attracted N4.24 billion.
Placed beside earlier quarters, the shift in composition is instructive. In the first quarter of 2025, Treasury Bills attracted N960.72 billion in interest while FGN bonds accounted for N1.40 trillion, including N67.99 billion on the FGN US Dollar Bond, and Savings Bonds took N2.72 billion. By the fourth quarter of 2025, Treasury Bill interest had fallen to N742.34 billion and FGN bond interest to N1.32 trillion, with Savings Bonds at N3.99 billion, Sukuk at N101.02 billion and the Green Bond at N5.59 billion. The rebound in Treasury Bill interest into 2026 tracks a sharp expansion in short dated borrowing.
The N3.14 trillion recorded in the first quarter of 2026 represents a 20.3 per cent increase on the N2.61 trillion spent in the same period of 2025, and a 37.5 per cent rise on the N2.28 trillion recorded in the final quarter of 2025. Notably, the mix has hardened. In the first quarter of 2025, interest stood at N2.37 trillion with principal repayments of N241.91 billion. A year later, principal repayments had fallen by roughly 30 per cent even as interest climbed.
Nigeria’s total public debt stood at N159.35 trillion, or about $114.95 billion, as at March 31, 2026, a marginal rise from N159.28 trillion at the end of December 2025. Compared with N149.39 trillion in March 2025, the stock grew 6.67 per cent year on year. It stood at N87.38 trillion as at June 30, 2023, shortly after President Bola Tinubu assumed office.
Domestic obligations made up 54.85 per cent of the portfolio, with external debt at 45.15 per cent. External debt rose slightly from $51.86 billion in December 2025 to $51.90 billion in March 2026, an increase of about $48.05 million, though in naira terms it fell from N74.43 trillion to N71.95 trillion. That drop was driven by currency movement rather than repayment: the DMO converted external debt at the Central Bank of Nigeria’s official rate of N1,386.2156 to the dollar at the end of March, against N1,435.26 in December.
Within the domestic portfolio, FGN Bonds remained dominant at N63.45 trillion, or 76.56 per cent, easing marginally by N179.25 billion quarter on quarter but still 6.12 per cent above the N59.80 trillion of March 2025. Treasury Bills climbed from N13.85 trillion in December to N16.57 trillion in March, an increase of N2.71 trillion or 19.6 per cent in three months and 30.45 per cent above the N12.70 trillion of a year earlier, lifting their share of federal domestic debt from 17.21 per cent to 19.99 per cent. Sukuk stood at N1.19 trillion, Savings Bonds at N116.21 billion, Promissory Notes at N1.39 trillion comprising N300.41 billion in naira and N1.08 trillion in foreign currency, and other instruments including the UFTF FGN Security at N100 billion.
While domestic costs rose, external debt service moved in the opposite direction. Nigeria paid $954.06 million on external obligations in the quarter, down 31.5 per cent from $1.39 billion in the first quarter of 2025. The payment comprised $308.33 million in principal, $623.22 million in interest and $22.50 million in other charges. The decline was largely a base effect: principal repayments in the corresponding 2025 quarter had stood at $759.58 million.
Converted at the DMO’s own March rate, the external payment translates to roughly N1.32 trillion. Combined with the domestic bill, total federal debt service for the quarter comes to about N4.46 trillion, or roughly 28 per cent of the N15.8 trillion earmarked for debt service in the entire 2026 fiscal year.
President Tinubu signed the N68.32 trillion 2026 Appropriation Bill into law on April 17, 2026, alongside an amendment extending implementation of the 2025 capital budget from March 31 to June 30. The Act, which took effect on April 1, earmarks N4.799 trillion for statutory transfers, N15.8 trillion for debt service, N15.4 trillion for recurrent expenditure and N32.2 trillion for the Development Fund for Capital Expenditure. Debt service alone takes 23.14 per cent of the budget. The fiscal framework projects revenue of N34.33 trillion, crude output of 1.84 million barrels per day and an exchange rate of N1,400 to the dollar. For comparison, the 2025 budget of N54.99 trillion carried a debt service provision of N14.32 trillion.
Set against actual collections, the pressure is visible. Data from the DMO, the National Bureau of Statistics and the Nigeria Customs Service indicate that Customs duties, Value Added Tax and Company Income Tax yielded a combined N7.14 trillion in the first quarter, meaning domestic debt service alone swallowed about 44 per cent of receipts from those three sources. The Customs Service generated N3.35 trillion, or 30.25 per cent of its approved N11.074 trillion annual target, leaving N7.724 trillion to be raised before year end. The Comptroller General of Customs, Dr Wale Adeniyi, attributed the performance to reforms and modernisation rather than exchange rate movement or favourable conditions, cautioning that “these are not the figures of an administration in difficulty. But I want to be careful about what those numbers prove.”
A large part of the rising domestic bill traces directly to the price of money in Nigeria. The Monetary Policy Committee, at its 306th meeting in Abuja on July 20 and 21, 2026, retained the Monetary Policy Rate at 26.5 per cent for the second consecutive time, following a 50 basis point cut from 27 per cent in February. The Cash Reserve Ratio was held at 45 per cent for deposit money banks and 16 per cent for merchant banks, with 75 per cent on non Treasury Single Account public sector deposits, and the asymmetric corridor at plus 50 and minus 450 basis points.
CBN Governor Olayemi Cardoso said the decision followed “a thorough assessment of the balance of risks,” adding that “global uncertainties have heightened due mainly to the renewed hostilities in the Middle East” and that “in view of the evolving developments, maintaining a cautious policy stance remains appropriate.” Headline inflation eased to 15.91 per cent in June 2026 from 15.93 per cent in May, according to the NBS, down from a peak above 30 per cent in 2024, though food inflation accelerated on a monthly basis from 2.98 per cent in May to 3.75 per cent in June.
With the benchmark rate above 26 per cent and 91 day Treasury Bills yielding around 16.3 per cent, every fresh naira the government raises domestically enters the books at historically elevated coupons, and each rollover of maturing paper resets the interest clock upward.
The debate over the cost of Nigeria’s debt predates this administration. The World Bank’s Macro Poverty Outlook of April 2023 reported that the debt service to revenue ratio had climbed from 83.2 per cent in 2021 to 96.3 per cent in 2022, at a time when public debt exceeded 38 per cent of GDP.
More recently, the World Bank’s Nigeria Development Update released on April 7, 2026 projected the debt to GDP ratio falling from 42.5 per cent in 2024 to 39.8 per cent in 2025, describing it as the first such decline in over a decade, and noted that debt service to revenue had “dropped significantly to levels not seen in many years.” The report tied the improvement to stronger revenue mobilisation and exchange rate gains, recording that FAAC revenues rose from N17.1 trillion, or 7.9 per cent of GDP, in 2024 to N37.4 trillion, or 9.5 per cent of GDP, in 2025. It also observed that expenditure growth in 2025 was driven by higher interest payments, an expanded wage bill and increased subnational capital spending, and projected growth steady at about 4.2 per cent between 2026 and 2028.
Speaking at the Africa Forward Summit in Nairobi on May 12, 2026, co hosted by Presidents Emmanuel Macron and William Ruto, President Tinubu put the year’s total debt service at about $11.6 billion, describing it as nearly half of projected revenue. “Every single dollar that leaves our treasury to pay punitive interest rates is a dollar that did not go into our steel sector, our textile mills, our agro-processing plants, or our digital industries,” he said. “It is a dollar that did not train a young Nigerian engineer or provide affordable power for our factories.”
He added that his administration’s measures, including subsidy removal, exchange rate unification, banking recapitalisation of over $3.4 billion and exit from the Financial Action Task Force grey list, “were sovereign choices, not external conditions,” and had “delivered a declining debt-to-GDP ratio, now projected at 32.3 per cent in 2026, stronger external reserves of $45.5 billion, and a return of investor confidence.”
The differing debt to GDP figures cited by the presidency and the World Bank reflect variations in coverage and methodology rather than a settled single number, and readers should treat the ratio as contested rather than fixed. The DMO has separately indicated that Nigeria’s total debt service rose to about N16 trillion in 2025.
Not all assessments have been favourable. Reacting to the 2026 Appropriation Act, the Lead Director of the Centre for Social Justice, Eze Onyekpere, questioned the fiscal arithmetic, asking, “How can the lawmakers be approving all the loans? Where are they going to get the funds for these debt servicing of over N15 trillion with humongous borrowing?” The Nigerian Economic Summit Group has also cautioned that, despite improving indicators, the country remains exposed to significant debt risks arising from weak revenue generation, structural imbalances and continued reliance on borrowing to finance deficits.
If the first quarter pattern holds, the pressure points are reasonably clear. The N2.71 trillion expansion in Treasury Bills within three months implies heavier short term rollover obligations through the rest of the year, at rates set by a policy stance the CBN has signalled it intends to keep restrictive. The naira’s appreciation during the quarter flattered the naira value of external debt and cushioned external service costs, a benefit that would reverse if the currency weakens. And with N169.68 billion in principal against N2.97 trillion in interest, the quarter did almost nothing to shrink the underlying stock.
The DMO figures remain quarterly actuals rather than projections, and the full year picture will depend on revenue performance, oil output against the 1.84 million barrels per day benchmark, the trajectory of the naira and the direction of the MPC’s next decisions. What the first quarter establishes is arithmetic rather than forecast: servicing debt is currently costing the Federal Government more than it is repaying, by a factor of roughly nineteen to one.