The Federal Government of Nigeria (FG) has borrowed a total of N6.17 trillion from the domestic debt market within the first half of 2025, according to new data released by the Debt Management Office (DMO).
The borrowings were primarily raised through Federal Government Bonds (FGN Bonds), Nigerian Treasury Bills (NTBs), and Promissory Notes (P-Notes), forming a critical part of Nigeria’s total domestic debt structure.
The DMO report revealed that N4.48 trillion was raised in the first quarter of 2025, followed by an additional N1.70 trillion in the second quarter — representing a modest 2.26% increase from the previous period. This brought the nation’s total domestic debt to N76.59 trillion as of June 30, 2025.
With oil output still below the 1.8 million barrels per day benchmark and non-oil revenues underperforming, the government has increasingly relied on debt to meet its spending commitments.
According to the Medium-Term Expenditure Framework (MTEF), Nigeria plans to raise over N13 trillion locally in 2025 to bridge its fiscal deficit — a target analysts say could be surpassed if current borrowing momentum persists.
Bonds Remain Backbone of Domestic Debt
An analysis of the DMO data by Nairametrics shows that FGN Bonds remain the dominant instrument, accounting for nearly 80% of total borrowings. As of June 2025, bond holdings stood at N60.65 trillion, made up of Naira-denominated bonds (N36.52 trillion), securitised Ways and Means Advances (N22.72 trillion), and US dollar-denominated bonds valued at N1.40 trillion.
The controversial Ways and Means Advances, formerly a short-term facility from the Central Bank of Nigeria (CBN), were converted into long-term debt instruments in 2024, significantly expanding Nigeria’s domestic debt profile.
Treasury Bills also maintained a strong position at N12.76 trillion or 16.67% of total borrowings, reflecting the government’s preference for short-term instruments to manage liquidity and rollover risks amid high yields.
Other instruments, including FGN Sukuk (N1.29 trillion), Savings Bonds (N91.53 billion), Green Bonds (N62.35 billion), and Promissory Notes (N1.73 trillion), make up the remainder of the debt structure. The Promissory Notes, used to offset contractor arrears and government liabilities, represent about 2.26% of total borrowings.
Borrowing Reflects Fiscal Strain and Market Confidence
Despite concerns over rising debt, Nigeria’s domestic borrowing pattern highlights both fiscal stress and continued investor confidence. The domestic debt stock climbed from N74.89 trillion in March 2025 to N76.59 trillion by June — an increase of N1.70 trillion.
Research firm Cordros Capital noted that Nigeria’s total public debt rose 2% quarter-on-quarter to N152.4 trillion in Q2 2025. Of this, 52.9% was domestic debt while 47.1% was external, estimated at USD46.98 billion.
In Naira terms, external debt rose by 1.7% due to fresh disbursements from the World Bank and African Development Bank and the continued depreciation of the naira, which averaged N1,529.21 per dollar during the quarter.
On a year-on-year basis, the total debt stock expanded by over 113%, driven largely by the weaker exchange rate and sustained domestic borrowing.
Sustainability and Policy Implications
Experts warn that Nigeria’s rising debt burden could strain fiscal sustainability. Debt servicing already consumes a significant share of government revenue, while total public debt is projected to hit N152.11 trillion by the end of 2025 — roughly 35.5% of GDP.
The securitisation of Ways and Means Advances has provided short-term relief, but the underlying structural imbalance between expenditure and revenue remains unresolved. Analysts caution that excessive borrowing could crowd out private sector credit, stifle investment, and raise the cost of debt servicing as FGN bond yields now average between 18% and 21%.
Inflation, which hovers around 23%, continues to erode real returns, increasing the government’s refinancing risk. Nonetheless, the domestic debt market remains a vital funding channel, offering stability amid foreign exchange volatility.
The government’s recent issuance of Sukuk and Green Bonds also signals a shift toward sustainability-focused and ethical investment products.
Balancing Borrowing with Reform
Preliminary projections indicate that by the end of Q3 2025, the Federal Government may have borrowed an additional N3 trillion, potentially pushing total domestic borrowings for the year to about N9 trillion.
Fiscal analysts argue that borrowing, when transparently managed and directed toward productive investments, can drive growth rather than deepen vulnerability.
Charles Fakrogha, Managing Director of Maxfund Africa Limited, emphasized the importance of accountability, saying: “Borrowing isn’t the problem — the issue is how the funds are used. If deployed effectively in infrastructure, manufacturing, and energy, it can yield long-term economic dividends.”
He added that recent macroeconomic indicators show gradual improvement in response to reforms, expressing optimism that sustained investment in infrastructure will ultimately spur growth and job creation.
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