Nigeria’s total public debt rose to ₦159.35 trillion at the end of March 2026, highlighting the Federal Government’s continued dependence on borrowing to finance budget deficits amid persistent revenue constraints and growing expenditure commitments.
Fresh figures released by the Debt Management Office (DMO) show that the country’s debt stock expanded by nearly ₦10 trillion over the past 12 months, reflecting sustained borrowing by the federal and sub-national governments despite ongoing efforts to strengthen public finances.
The latest data indicate that domestic debt remained the largest component of Nigeria’s debt portfolio, reaching ₦87.40 trillion, equivalent to 54.85% of the total public debt. The increase was largely driven by higher issuance of Treasury Bills and other local debt instruments used to finance government operations and refinance maturing obligations.
Treasury Bills recorded one of the strongest increases during the first quarter of 2026, rising by ₦2.71 trillion, or 19.6%, to ₦16.57 trillion. Market analysts say the heavier reliance on short-term securities reflects the government’s preference for domestic funding while limiting exposure to foreign exchange risks.
Nigeria’s external debt stood at $114.95 billion, representing an 18.22% year-on-year increase in dollar terms. However, the naira value of foreign obligations declined by ₦2.48 trillion during the quarter as the local currency strengthened modestly against the US dollar.
According to the DMO, the exchange rate used for debt valuation improved to ₦1,386.22 per dollar in March 2026 from ₦1,435.26 per dollar at the end of December 2025, reducing the naira equivalent of external liabilities despite the higher dollar-denominated debt stock.
Borrowing also increased at the sub-national level. Combined debt owed by state governments and local government councils climbed by ₦163.25 billion, or 3.74%, to ₦4.52 trillion, underscoring continued financing pressures across the federation.
While Nigeria’s debt profile remains within internationally accepted debt-to-GDP thresholds, analysts argue that the country’s biggest challenge is not the size of the debt itself but the cost of servicing it relative to government revenue.
The 2026 federal budget earmarks ₦15.9 trillion for interest payments alone, almost half of the projected ₦33.39 trillion in government revenue. Economists warn that such a high debt-service burden leaves limited fiscal space for infrastructure, healthcare, education and other capital investments needed to stimulate long-term economic growth.
“We are borrowing to service past borrowing,” said Abuja-based financial analyst Dr. Chuka Obi, noting that without stronger non-oil revenue mobilisation, broader tax reforms and tighter control of recurrent spending, Nigeria’s debt trajectory could become increasingly difficult to sustain.
The DMO has maintained that the country’s debt remains manageable when measured against gross domestic product and compares favourably with several regional peers. Nevertheless, investors and credit rating agencies will closely monitor how the government balances future borrowing with efforts to improve revenue generation and fiscal discipline.
Attention is now turning to the Federal Government’s planned Eurobond issuance later this year, which is expected to test investor confidence while providing another source of funding for budget implementation and infrastructure development.
