Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months

The federal government spent N6.32 trillion on domestic debt servicing between January and September 2025, surpassing the N5.87 trillion spent on domestic debt servicing for the entire 2024 financial year, according to the latest data from the Debt Management Office (DMO).

Interest payments made up the lion’s share of the outlay, totalling about N6.06 trillion, while principal repayments accounted for the remainder.

A breakdown of the figures shows that FGN bonds were the largest cost driver. Interest payments on naira-denominated bonds increased steadily during the period, peaking at N804.95 billion in September.

Cumulatively, FGN bond interest payments surpassed N5.35 trillion in nine months.

Treasury bills also significantly contributed to debt servicing costs. Treasury bill interest payments surged to N536.05 billion in March after N394.16 billion in February, bringing total NTB interest to about N1.81 trillion for the period. This highlights the high cost of short-term domestic borrowing in a tight liquidity environment.

Other debt instruments contributed smaller amounts. Interest on domestic US dollar bonds was recorded in January, July, and August, while Sukuk payments were concentrated in April, June, and July. The Federal Government also serviced green bonds and savings bonds, though these accounted for a relatively small portion of the total.

On the principal side, repayments on promissory notes added to obligations, with notable outlays in February, April, and May. However, these were significantly lower than interest costs.

A month-by-month analysis shows March as the highest domestic debt service month, with total payments of N1.30 trillion, followed by February at N1.03 trillion and September at N998.28 billion. January had the lowest outlay at N274.74 billion.

Economists have warned that elevated domestic borrowing costs are crowding out capital expenditure and social spending, especially as interest payments continue to outpace revenue growth.

DMO data shows that Nigeria’s domestic debt stock grew by N7.40 trillion within the first nine months of 2025, rising from N70.41 trillion at the end of 2024 to N77.81 trillion by September 30, 2025 — a 10.52 per cent increase.

FGN bonds continued to dominate the portfolio, rising from N55.44 trillion (78.73 per cent of domestic debt) in December 2024 to N61.99 trillion (79.67 per cent) by September 2025, reflecting an additional N6.56 trillion raised through issuances.

The bond portfolio includes both naira-denominated instruments and domestic US dollar bonds. As of September 2025, naira bonds stood at N60.64 trillion, while domestic US dollar bonds were N1.35 trillion.

Treasury bills remained the second-largest debt component, rising from N12.35 trillion to N12.68 trillion, though their share of total domestic debt fell from 17.54 per cent to 16.30 per cent.

Other instruments also grew, including:

FGN Sukuk: from N992.56 billion to N1.29 trillion

FGN Savings Bonds: from N72.87 billion to N97.46 billion; Green Bonds: from N15 billion to N62.36 billion; Promissory Notes: from N1.54 trillion to N1.69 trillion