Debt Servicing Exceeds Capital Spending by N3.9trn

Nigeria spent ₦27.2tn servicing public debt between 2024 and 2025, exceeding capital expenditure by ₦3.9tn, according to a media brief from the Federal Ministry of Finance.

The report showed debt servicing rose from ₦12.63tn in 2024 to ₦14.57tn in 2025, a 15.4% increase. In both years, actual payments overshot budget projections by a combined ₦5.52tn.

Officials explained that the rise was driven mainly by naira depreciation and higher domestic interest rates, not fresh borrowing.

“External debt is denominated in foreign currency. When the naira depreciates, the naira cost of servicing the same dollar debt rises automatically,” the brief stated.

Debt servicing absorbed a large share of government revenue. In 2024, about 60% of revenue went to debt payments, rising to 66% by November 2025.

Capital spending remained relatively high, with ₦11.59tn in 2024 and ₦11.7tn in 2025, but still fell short of debt service costs.

The ministry stressed that project-tied loans from development partners ensured infrastructure projects continued despite limited cash releases.

The brief also highlighted reforms, including halting the excessive use of Ways and Means advances from the CBN, which had accumulated to ₦30tn.

These overdrafts have now been securitised and formally recognised within the debt framework.

Experts warned of the human impact of rising debt costs. “The true cost of debts is the out-of-school child, the out-of-school girl,” said Folahan Johnson of CISD, while others flagged risks to fiscal space and growth.

Looking ahead, analysts project debt service could exceed ₦15tn in 2026, about half of projected revenue, constraining government capacity to fund capital projects and growth-enhancing initiatives.