Foreign Borrowing Hits $51.9bn in Q1 Amid N159.35trn Debts Stock As Fiscal Deficit Widens

Foreign borrowing reached $51.9 billion in the first quarter as Nigeria’s total public debt stock rose to N159.35 trillion, the Debt Management Office (DMO) said, heightening concerns about fiscal sustainability as the country’s deficit widened.

The DMO’s latest quarterly report shows total public debt increased marginally to N159.35 trillion as of March 31, 2026, from N159.28 trillion at end-December 2025 — a net rise of about N71.6 billion during Q1 2026. Measured in dollars using the DMO’s conversion rate, the total debt stock is equivalent to $114.95 billion.

External borrowing and composition

External debt stood at $51.90 billion (N71.95 trillion) as of March 31, 2026, representing 45.15 per cent of the total public debt portfolio. The DMO said multilateral creditors account for the largest share of external obligations, holding $23.86 billion, or 45.96 per cent of external debt, with the World Bank Group a significant lender.

Commercial creditors — largely reflecting Eurobond liabilities — provided $18.55 billion, or 35.73 per cent. Bilateral debt accounted for $6.59 billion, or 12.69 per cent, while syndicated loans represented $2.86 billion, or 5.51 per cent. The report identified major bilateral exposures to Chinese lenders, including $4.95 billion owed to China Exim Bank and $507.52 million to China Development Bank.

The DMO used the Central Bank of Nigeria’s official exchange rate of US$1 = N1,386.2156 as of March 31, 2026 to translate external obligations into naira.

Domestic debt dynamics

Domestic debt continued to form the larger share of the portfolio, standing at N87.40 trillion (equivalent to $63.05 billion) or 54.85 per cent of total public debt.

Federal Government domestic borrowing made up N82.88 trillion, or 52.01 per cent of total public debt, with states and the Federal Capital Territory accounting for N4.52 trillion, or 2.84 per cent.

Within federal domestic debt, Federal Government of Nigeria (FGN) bonds remained dominant at N63.45 trillion, representing 76.56 per cent of FGN domestic debt. Nigerian Treasury Bills accounted for N16.57 trillion, or 19.99 per cent. Other federal instruments included FGN Sukuk at N1.19 trillion, FGN Savings Bonds at N116.21 billion, promissory notes totaling N1.39 trillion (split into N300.41 billion in naira-denominated and N1.08 trillion in foreign-currency-denominated notes), and other instruments such as the UFTF FGN security at N100 billion.

The concentration of domestic borrowing in long-dated FGN bonds and shorter-term Treasury Bills underscores ongoing reliance on the local market to finance fiscal needs, the DMO said.

Quarterly change and drivers

The modest increase in the debt stock during Q1 was driven by a mix of fresh external and domestic borrowings and changes in exchange rates applied to foreign obligations. While the quarter-on-quarter increase was small in absolute naira terms, analysts say the composition and rising share of external commercial obligations such as Eurobonds heighten rollover and currency risks, particularly if global interest rates remain elevated.

Debt trajectory since 2023

The report draws attention to a marked expansion in Nigeria’s debt profile since mid-2023. DMO data show total public debt stood at N87.38 trillion on June 30, 2023, shortly after the current administration took office. By December 2025, external debt had risen from $42.49 billion in December 2023 to $51.86 billion, while domestic debt expanded from N59.1 trillion to N89.4 trillion over the same period.

Fiscal deficit and policy implications

The DMO flagged worsening fiscal metrics: the fiscal deficit for 2024 widened to N13.51 trillion, pushing the deficit-to-GDP ratio above the level permitted under the Fiscal Responsibility Act 2007. Rising debt and deficit levels place pressure on the government’s ability to meet debt-service obligations without crowding out capital spending or prompting further borrowing.

Debt servicing costs: A larger stock of external commercial debt could increase interest outflows, particularly if new borrowings carry higher coupons or if exchange rate depreciation raises naira equivalents.

Rollover risk: Maturing Eurobonds and commercial loans may face refinancing risk if market conditions deteriorate or sovereign risk perceptions worsen.

Fiscal space: Continued expansion of the debt stock may constrain fiscal buffers, limiting room for economic stimulus or capital projects without higher borrowing or revenue measures.

State-level exposure: While states’ share of total public debt remained smaller, rising subnational borrowing and contingent liabilities could add complexity to overall debt management.

The DMO reiterated its role in tracking and managing sovereign debt, while urging careful sequencing of borrowing to limit risks. The report recommended sustained revenue mobilisation, tighter fiscal discipline, and a focus on concessional financing where possible.