Nigeria’s home debt service invoice surged by 164 % year-on-year within the first quarter of 2025, pushed by sharp will increase in curiosity funds on Treasury Payments and Federal Authorities bonds, in accordance with knowledge sourced from the Debt Administration Workplace (DMO).
The DMO knowledge revealed that the federal authorities spent N2.6 trillion on home debt service between January and March, marking a 65 % enhance from the earlier quarter.
The rise, in accordance with FBNQuest Service provider Financial institution, “displays a recurring seasonal sample, the place debt obligations sometimes peak within the first quarter of the 12 months as a result of the next quantity of debt issuances throughout this era, leading to a front-loaded debt service profile.”
Learn additionally: Weaker naira pushes Nigeria’s debt to nearly N150trn
Treasury Payments have been a key driver of the spike. The worth of Nigerian Treasury Payments (NTBs) greater than doubled to N961 billion, up from N374 billion in This autumn 2024. This pushed their share of whole home debt service to 36.8 %, from 23.7 % within the earlier quarter.
Curiosity funds on FGN bonds additionally rose considerably, accounting for 54 % of whole debt service prices. In absolute phrases, bond funds elevated by 47 % year-over-year to over N1.4 trillion, with common bonds accounting for N1.3 trillion of that quantity.
There was additionally an curiosity cost of just about N68 billion on FX-denominated home bonds in the course of the quarter.
Learn additionally: Nigeria’s current account balance to slow on weaker oil production
FBNQuest said in a notice to shoppers not too long ago that “the upward development in home debt servicing underscores the persistent fiscal pressure confronted by the federal government, largely stemming from continued income underperformance.”
The analysts warned that with Nigeria’s public debt nonetheless rising, curiosity funds are prone to stay a heavy burden on the federal price range.
“We anticipate curiosity funds to proceed to devour a good portion of the FGN’s income, doubtlessly exerting mounting stress on fiscal sustainability,” the report said.
Learn additionally: How Nigeria’s tax reforms will cut debt, ease low-income earners
Africa’s high crude producer is at the moment grappling with a rising public debt that rose by N27.72 trillion to N149.39 trillion in a single 12 months, largely as a result of a weak naira that’s continued to balloon the nation’s exterior obligations.
However the tide could start to show as authorities have signed the 4 landmark tax reform payments into legislation, anticipated to begin absolutely initially of subsequent 12 months.
The transfer, in accordance with analysts, will develop the Nigeria’s income base, shifting the nation’s tax as a share of GDP from a paltry 10 % to 18 %, in addition to lower borrowings.
Nonetheless, FBNQuest cautioned that the influence wouldn’t be instant, “primarily because of the scheduled implementation timeline, which defers the graduation of key measures till 2026.”
