Nigeria’s fiscal landscape is under mounting pressure as the cost of servicing public debt under President Bola Tinubu’s administration is projected to exceed ₦91 trillion between 2023 and 2028 — a stark indicator of the country’s widening fiscal deficits, weak revenue performance, and rising borrowing costs.
Rising Debt Service: The Numbers
According to budget data and projections contained in the Medium‑Term Expenditure Framework (MTEF) 2026–2028:
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The federal government significantly undershot its debt service targets in the past two years, with actual outlays far exceeding budgeted amounts. In 2023, the government spent ₦8.56 trillion on debt servicing versus a budget of ₦6.56 trillion, and in 2024 it spent ₦12.63 trillion against a ₦8.27 trillion allocation.
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For 2025, ₦14.32 trillion has been budgeted for debt service, but early performance suggests the government may surpass that figure again.
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Projections show debt service rising to ₦15.9 trillion in 2026, and further to ₦19.8 trillion in both 2027 and 2028. While total budgeted spending on debt service across these six years is about ₦84.6 trillion, historical overshoots are expected to push the actual figure above ₦91 trillion.
This trajectory underscores the growing claims that debt obligations are becoming one of the most significant draws on federal finances.
What’s Driving This Surge?
Several interlinked factors explain why debt service is outpacing expectations:
1. Weak and Volatile Revenue
Government revenues have repeatedly fallen short of projections, which forces policymakers to borrow more to cover recurrent costs and deficits. For example, in 2024, actual government revenue of ₦20.98 trillion was nearly ₦5 trillion below budget targets.
Similarly, in the first seven months of 2025, pro‑rated revenue was about ₦13.6 trillion, far below the expected ₦23.8 trillion.
2. Rising Debt Stock and Borrowing Costs
Both domestic and external debt have climbed sharply: domestic debt expanded from ₦54.3 trillion in 2022 to ₦80.5 trillion, while external debt rose to $46.9 billion (about ₦71.8 trillion).
High interest rates — with government borrowing costs north of 20% — further amplify debt servicing costs, especially as older, cheaper debts are refinanced at higher rates.
3. Fiscal Deficits and Over‑Borrowing
Persistent budget deficits push the government to borrow more, and data suggests borrowing often exceeds approved targets, heightening the risk of a self‑reinforcing debt cycle.
The Cost to Development
The dominance of debt service in the budget has tangible consequences:
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Capital expenditure is under pressure — historically lower capital releases compared with debt payments mean funds for infrastructure, healthcare, and education are squeezed. In 2025, pro‑rated capital spending was just ₦3.59 trillion, far below debt service, which has already exceeded projections.
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Debt service is consuming a growing share of federal revenue, which in 2025 amounted to over 70% in the first seven months, crowding out other expenditures.
This situation stifles long‑term development initiatives and may constrain economic growth if not addressed.
Outlook: What Comes Next?
Unless significant reforms are implemented, analysts warn that debt service will continue to dominate Nigeria’s fiscal framework:
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Revenue reforms — broadening the tax base, stabilising oil revenue streams, and strengthening non‑oil revenues — are essential to ease reliance on borrowing.
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Debt strategy and cost management — including restructuring costly domestic debts and securing concessional financing, can help lower servicing costs.
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Fiscal discipline — curbing excessive borrowing and ensuring budgets align with realistic revenue expectations will be critical.
In sum, the projection that debt service will exceed ₦91 trillion by 2028 is both a reflection of current fiscal trends and a clarion call for stronger economic governance to protect Nigeria’s development priorities.
