December 12, 2025/CSL Update
According to the data from the National Bureau of Statistics (NBS), Nigeria’s domestic debt stock rose to ₦80.6 trillion in Q2 2025, up from ₦78.8 trillion in Q1, an increase of 2.0% quarter-on-quarter (q/q). This also represents a 13.0% year-on-year (y/y) rise from ₦71.2 trillion recorded in Q2 2024. Over the same period, external debt expanded to US$52.6 billion from US$51.2 billion in Q1, marking increases of 2.7% q/q and 8.7% y/y.
Together, these movements reflect a persistent upward trajectory that has pushed Nigeria’s total public debt-to-GDP ratio to 48.2% based on the rebased GDP numbers. Although this remains below the government’s self-imposed 60% threshold, it underscores rising fiscal vulnerabilities. Domestic debt now accounts for 53% of total public debt, while external debt represents the remaining 47%.
Successive Nigerian governments have relied heavily on borrowing to fund the national budget, a pattern that highlights deeper structural weakness in revenue generation. Despite attempts to broaden the tax base, boost non-oil exports, and enhance digital revenue collection, government income remains inadequate relative to rising expenditure.
One of the most alarming indicators is the debt service–to–revenue ratio, which has surged far above the World Bank’s recommended limit of 22.5% for low-income countries. This leaves a shrinking share available for essential sectors such as healthcare, defence, education, and critical infrastructure. On a similar front, the recently approved Federal Executive Council (FEC) Medium-Term Expenditure Framework (MTEF) underscores the severity of Nigeria’s fiscal constraints. With a projected budget deficit of ₦20.1 trillion, representing more than 58% of the Federal Government’s expected ₦34.33 trillion revenue.
The rising debt stock and widening fiscal deficit underscore the urgency for Nigeria to accelerate structural reforms that can expand the country’s revenue capacity and reduce its long-standing dependence on oil proceeds. While recent policy measures such as the drive towards digital tax administration and incentives aimed at boosting non-oil exports represent steps in the right direction, they remain insufficient to counter the scale of fiscal pressure now confronting the economy.
A more sustainable path will require broadening the productive base of the non-oil sector, deepening value addition across agriculture and manufacturing, and aggressively promoting domestic investment and FDI into growth-enhancing industries.
Also, strengthening the fiscal framework through enhanced transparency in government spending, stricter project monitoring, and a more disciplined approach to borrowing will help ensure that new debt is channelled primarily into infrastructure and productivity-boosting projects with measurable economic returns.
Click here to download full report: CSL Nigeria Daily- 12th December 2025- Economy.pdf
