Nigeria’s debt servicing costs ballooned by 68% to N13.12tn in 2024, exceeding the budget. Rising interest rates and borrowing fuel fiscal pressure
Nigeria’s debt servicing bill surged by a staggering 68 per cent in 2024, hitting N13.12tn, new data reveals. This escalating expenditure underscores the growing strain on the nation’s finances.
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Analysis of fresh data released by the Debt Management Office (DMO) indicates that Nigeria’s expenditure on servicing its debts reached a total of N13.12tn in 2024. This represents a dramatic 68 per cent increase compared to the N7.8tn recorded in the preceding year.
A closer look at the figures by MetroNews reveals that the actual debt servicing costs for 2024 surpassed the initial budgetary allocation of N12.3tn for the year.
This higher-than-anticipated outlay highlights the mounting pressure that debt obligations are exerting on Nigeria’s fiscal sustainability.
Looking ahead, the Federal Government has earmarked a substantial N16tn for debt servicing in the 2025 budget.
This significant allocation reflects the government’s expectation of continued high debt-related expenses amidst a backdrop of increasing borrowing costs and a growing overall debt burden, which collectively pose a challenge to the country’s financial stability.
The DMO data further breaks down the debt servicing costs. Domestic debt servicing in 2024 amounted to N5.97tn, marking a 14.15 per cent rise from the N5.23tn recorded in 2023. This notable increase is largely attributed to elevated interest rates and increased domestic borrowing activities.
On the external front, Nigeria spent $4.66bn, which translates to N7.15tn based on an average exchange rate of N1,535.32 to the US dollar.
This figure represents a sharp 167 per cent increase from the N2.57tn spent in 2023. The significant surge in external debt servicing costs is primarily due to rising global interest rates and the depreciation of the Nigerian naira, making dollar-denominated debt more expensive to service.
Despite the steep rise in external debt service costs, domestic debt continues to constitute a significant portion of Nigeria’s overall debt servicing expenses.
The data shows that Nigeria’s domestic debt service for 2024 increased by 36.27 per cent to approximately N5.97tn, compared to N4.38tn in 2023, representing an increase of about N1.59tn.
Federal Government Bonds accounted for the bulk of the domestic debt service in 2024, totalling N4.69tn, or roughly 78.59 per cent of the total.
This is an increase from N3.66tn in 2023, indicating a rise of approximately N1.03tn or 28.2 per cent. Nigeria Treasury Bills contributed N747.15bn to the total domestic debt service in 2024, a substantial 129 per cent increase from the N326.12bn recorded in 2023.
MetroNews also revealed a significant 33 per cent year-on-year increase in external debt service, rising to $4.66bn in 2024 from $3.50bn in 2023, an increase of $1.16bn. Commercial creditors, particularly Eurobond holders, were the largest beneficiaries of these payments.
Conversely, the combined external debt stock of the 36 states and the Federal Capital Territory saw a slight decrease to $4.80bn as of December 31, 2024, down from $4.61bn at the end of 2023. Lagos State remains the highest debtor among the subnational entities.
Despite the escalating debt burden, Vice President Kashim Shettima recently assured Nigerians that the Federal Government is now borrowing less and is restructuring its borrowing strategy to alleviate the debt burden. He highlighted that the 2025 budget deficit represents the lowest in recent years.
Experts, however, have urged the government to pursue more aggressive revenue mobilisation strategies and implement prudent debt management practices to mitigate the growing fiscal risks associated with the nation’s increasing debt obligations.
