The Federal Government has borrowed a staggering ₦6.17 trillion from domestic lenders in the first half of 2025, underscoring its growing reliance on local funding to bridge persistent budget deficits and sustain public spending.
According to data from the Debt Management Office (DMO), the government raised ₦4.48 trillion in the first quarter and another ₦1.7 trillion in the second quarter — a 2.26% increase bringing total domestic debt to ₦76.59 trillion as of June 30, 2025. With oil production still below 1.8 million barrels per day and non-oil revenues underperforming, the government has turned heavily to the domestic market to keep the economy running.
The DMO’s breakdown reveals that the bulk of the funds came from Federal Government Bonds (FGN Bonds), Nigerian Treasury Bills (NTBs), and Promissory Notes (P-Notes) – the pillars of Nigeria’s domestic debt structure. FGN Bonds remain the government’s preferred instrument, accounting for nearly 80% of all borrowings. By June, total bond holdings stood at N60.65 trillion, made up of Naira-denominated bonds (₦36.52 trillion), securitised Ways and Means Advances (₦22.72 trillion), and US Dollar bonds (N1.40 trillion). The securitisation of Ways and Means — overdrafts previously provided by the Central Bank, significantly expanded the government’s long-term obligations in 2024.
Treasury Bills followed with ₦12.76 trillion, representing 16.67% of total domestic borrowings. Analysts say the increased issuance of T-Bills reflects a short-term liquidity strategy in a high-yield environment, as government seeks to manage refinancing risks and attract investors. Other debt instruments, such as Sukuk Bonds (₦1.29 trillion), Savings Bonds (₦91.53 billion), Green Bonds (N62.35 billion), and Promissory Notes (₦1.73 trillion), provided further diversification, albeit with smaller contributions.
Overall, Nigeria’s total public debt rose by 2% quarter-on-quarter from ₦149.39 trillion in Q1 to N152.4 trillion in Q2 2025, according to Cordros Capital. Domestic debt accounted for 52.9% of this figure, while external debt made up 47.1%, or USD46.98 billion. The slight increase in external debt was attributed to fresh disbursements from the World Bank (USD1.15 billion) and the African Development Bank (USD12.14 million).
In Naira terms, external debt climbed 1.7% to ₦71.85 trillion, based on an average exchange rate of ₦1,529.21 per dollar. Year-on-year, Nigeria’s total debt stock ballooned by 113.5%, driven largely by naira depreciation and the government’s increased reliance on domestic borrowing to fund its budget.
Despite concerns about the mounting debt load, investor confidence in government securities has remained strong. Analysts say the continued oversubscription of bonds and bills reflects trust in the federal government’s repayment capacity and the resilience of Nigeria’s capital market. However, they also warn that the reliance on debt to finance recurrent expenses rather than productive investments, could jeopardize long-term fiscal health.
Already, debt servicing consumes a substantial portion of government revenue, leaving limited resources for capital projects, social welfare, and critical infrastructure. Cordros Capital projects that total public debt could reach ₦152.11 trillion by December, representing 35.5% of GDP, a ratio that heightens pressure on fiscal managers to strike a balance between short-term stimulus and long-term sustainability.
The securitisation of the Central Bank’s Ways and Means Advances offered short-term relief by converting overdrafts into long-term debt instruments, but it did little to fix the deeper structural problem, the widening gap between government revenue and expenditure. Economists warn that unless Nigeria reforms its fiscal model, borrowing alone cannot close its financial imbalance.
The first half of 2025 paints a clear picture of a government caught between dwindling revenues and rising expenditure.
While FGN Bonds and Treasury Bills remain vital tools for maintaining liquidity and investor confidence, the sustainability of this debt-driven strategy is increasingly being questioned.
For now, Nigeria’s economic stability rests heavily on its ability to borrow — a strategy that may buy time, but not necessarily progress.
For ordinary Nigerians, the Government’s borrowing binge is more than a fiscal statistic, it’s a looming storm over daily survival. Each trillion borrowed translates into heavier debt servicing, higher taxes and steeper inflation that erodes purchasing power.
As the Government competes with businesses for local credit, interest rates climb, making loans, mortgages, and small business financing painfully expensive.
Meanwhile, most of the borrowed funds go into recurrent spending, salaries, subsidies, and administrative costs rather than infrastructure or job creation. The result is a widening gap between government consumption and citizens’ welfare.
In essence, Nigerians are financing a debt spiral that offers little relief, as public funds are recycled into repayment rather than progress. Unless fiscal discipline replaces this borrowing culture, the average citizen will keep paying more for less trapped in an economy running on credit instead of growth.
