…as FG spends more on T-Bills, bonds
Nigeria’s domestic debt service bill surged by 164 percent year-on-year in the first quarter of 2025, driven by sharp increases in interest payments on Treasury Bills and Federal Government bonds, according to data sourced from the Debt Management Office, (DMO).
The DMO data revealed that the federal government spent ₦2.6 trillion on domestic debt service between January and March, marking a 65% increase from the previous quarter
The rise, according to FBNQuest Merchant Bank, “reflects a recurring seasonal pattern, where debt obligations typically peak in the first quarter of the year due to a higher volume of debt issuances during this period, resulting in a front-loaded debt service profile”.
Treasury Bills were a key driver of the spike. The value of Nigerian Treasury Bills (NTBs) more than doubled to ₦961 billion, up from ₦374 billion in Q4 2024. This pushed their share of total domestic debt service to 36.8%, from 23.7% in the previous quarter.
Interest payments on FGN bonds also rose substantially, accounting for 54% of total debt service costs. In absolute terms, bond payments increased by 47% year-over-year to over ₦1.4 trillion, with regular bonds accounting for ₦1.3 trillion of that amount. There was also an interest payment of almost N68 billion on FX-denominated domestic bonds during the quarter.
In a note to clients recently, FBNQuest stated that “the upward trend in domestic debt servicing underscores the persistent fiscal strain faced by the government, largely stemming from continued revenue under-performance”.
The analysts warned that with Nigeria’s public debt still rising, interest payments are likely to remain a heavy burden on the federal budget.
Nigeria is currently grappling with a rising public debt that rose by ₦27.72 trillion to ₦149.39 trillion in one year, largely due to a weak naira that’s continued to balloon the country’s external obligations. But the tide may begin to turn as authorities have signed the four landmark tax reform Bills into law, expected to commence fully at the beginning of next year.
The move, according to analysts, will expand Nigeria’s revenue base, moving the nation’s tax as a percentage of GDP from a paltry 10% to 18 percent, as well as cut borrowings. However, FBNQuest cautioned that the impact would not be immediate, “primarily due to the scheduled implementation timeline, which defers the commencement of key measures until 2026”.
