Domestic debt servicing in the primary six months of 2026 already amounted to 61.4 per cent of the N8.61 trillion spent in the entire of 2025, placing the federal government heading in the right direction to face a doubtlessly heavier debt burden if the tempo of funds persists, Daily Trust evaluation has proven.
Nigeria spent N8.61 trillion servicing its home debt in 2025, whereas the Federal Government incurred one other N5.28 trillion in home debt-service expenditure in the primary six months of 2026, highlighting the persevering with strain of borrowing prices on public funds.
Data from the Debt Management Office (DMO) confirmed that the federal government’s home debt-service expenditure in 2025 comprised N8.24 trillion in curiosity funds and N370.93 billion in principal repayments on promissory notes.
Interest funds accounted for roughly 95.7 per cent of the full expenditure, whereas principal repayments represented the remaining 4.3 per cent.
In the primary half of 2026, the federal government spent N4.95 trillion on curiosity and rental funds, whereas N333.96 billion went in direction of principal repayments on promissory notes.
The first-half expenditure was equal to about 61.4 per cent of the full home debt-service invoice recorded all through 2025, indicating the substantial value of servicing present obligations inside a shorter interval.
However, the comparability covers six months in 2026 in opposition to the total yr in 2025. This, nonetheless, doesn’t signify a direct year-on-year development price.
The DMO’s 2025 report confirmed that Nigerian Treasury Bills and Federal Government bonds accounted for the majority of curiosity funds.
Interest on Federal Government of Nigeria (FGN) naira bonds stood at N5.35 trillion, whereas Treasury Bills attracted N2.55 trillion through the yr.
Interest funds on FGN greenback bonds amounted to N140.29 billion, whereas FGN Sukuk accounted for N171.73 billion. The authorities additionally paid N13.59 billion on FGN Savings Bonds and N6.67 billion on inexperienced bonds.
The figures underline the dominant position of typical authorities securities in the home debt-service burden, with bond and Treasury Bill curiosity funds accounting for many of the whole.
Monthly information confirmed that home debt-service expenditure fluctuated all through 2025, reflecting the timing of curiosity obligations and principal repayments.
Total funds rose from N274.74 billion in January to N1.03 trillion in February and N1.30 trillion in March. Expenditure subsequently declined to N423.10 billion in May earlier than growing to N998.28 billion in September.
The authorities recorded N963.27 billion in home debt-service expenditure in December, bringing the full-year whole to N8.61 trillion.
In the primary half of 2026, curiosity and rental funds accounted for roughly 93.7 per cent of the N5.28 trillion home debt-service expenditure.
This means that interest-related obligations continued to represent the most important part of the federal government’s home debt funds.
The rising value of debt servicing has important implications for the non-public sector, in accordance with analysts who insist that the home borrowing is crowding out the non-public sector.
Although the 2026 figures cowl solely the primary six months, the quantity already spent underscores the dimensions of the federal government’s home debt obligations.
Also the full-year end result will depend upon the timing of curiosity funds, extra borrowing, principal repayments and different fiscal developments.
FG crowding out non-public sector– Expert
Economic professional, Dr. Marcel Okeke warned that the Federal Government’s heavy borrowing from the home monetary market is crowding out non-public companies, leaving producers and different traders struggling to entry credit score at inexpensive charges.
Okeke stated the federal government’s dominant presence throughout the native monetary market, together with the Treasury Bills market and different debt devices, was limiting the funds accessible to companies and driving up borrowing prices.
He argued that the federal government’s substantial home debt-servicing expenditure mirrored the dimensions of its borrowing and its dominance in the competitors for funds throughout the financial system.
“When government plays very, very large in all the arms of the local market, that is crowding out the private sector,” he stated.
Okeke questioned how companies might stay worthwhile when borrowing charges had been as excessive as 23 per cent or extra, warning that costly credit score undermined funding, manufacturing and financial enlargement.
“What kind of business is it even profitable?” he requested, highlighting the problem producers face in elevating funds to develop operations beneath prevailing lending situations.
Okeke stated the federal government wanted to scale back its dependence on borrowing and pursue a extra sustainable financing technique anchored on financial diversification and stronger income technology.
According to him, a stronger financial system would allow extra companies to function profitably, broaden the tax base and improve authorities income, decreasing the necessity for large home borrowing.
He maintained that relying extra on taxation generated by productive financial exercise, reasonably than persistent borrowing from the native market, would assist ease strain on companies and create higher room for private-sector funding.
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