Nigeria’s Debt Grows by N4.72 Trillion Amid Naira Depreciation

• Nigeria’s total national debt rose to ₦149.38 trillion in the first quarter of 2025, increasing by N4.72 trillion from the previous quarter due to borrowing to cover budget deficits and the naira’s depreciation
• External debt stood at N70.63 trillion ($45.9 billion), with the weakening currency significantly inflating naira-denominated debt despite modest dollar increases
• The country’s per capita debt has crossed N600,000, raising concerns about the strain on public finances and the government’s ability to fund developmental projects

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

The Debt Management Office (DMO) reports that in the first quarter (Q1) of 2025, Nigeria's total national debt increased to N149.38 trillion.

The debt office revealed that the total national debt increased by N4.72 trillion, or 3.3 percent, from the N144.67 trillion recorded in the fourth quarter (Q4) of 2024.

According to the DMO, the overall external debt stands at N70.63 trillion ($45.9 billion), while the total internal debt is N78.75 trillion ($51.2 billion).

Nigeria's governmental debt has been fueled by borrowing from both domestic and foreign sources to cover budget deficits, which has been made worse by the effect of the naira's decline on the value of external debt.

Impact of N70.63 trillion debt on currency

According to recent financial data, Nigeria's external debt increased by N14.61 trillion, or 26.1% annually, from N56.02 trillion in 2024 to N70.63 trillion in Q1 2025.

The gain was less significant on a quarter-over-quarter basis, going up just N344 billion from N70.29 trillion at the end of the previous year.

The debt data' notable discrepancy between dollar and naira growth underscores the growing effects of foreign currency volatility. The depreciation and constant servicing of the local currency caused the naira equivalent to soar, despite the dollar-denominated debt only increasing by $3.86 billion.

According to reports, the Central Bank of Nigeria utilised a ₦1,330.26/$1 exchange rate in the first quarter of 2024. The sharp increase in naira terms indicates a significant drop in currency value, even though the official rate for Q1 2025 was not made public.

Foreign borrowings from bilateral partners, multilateral lenders, and commercial creditors, such as holders of World Bank and Eurobonds, have contributed to the nation's growing debt by raising the cost of foreign loans in local currency.

Since a sizable amount of revenue is used to pay back the principal and interest on foreign loans, this has also made it more difficult for the nation to finance growth initiatives.

Nigeria’s per capita debt crosses N600k

Legit.ng reported data from the Debt Management Office (DMO) shows that Nigeria’s debt profile stood at N144.665 trillion, approximately $94.2 billion, as of December 31, 2024.

Nigeria’s debt is a complex and evolving landscape that has increased recently, primarily driven by budget deficits, exchange rate depreciation, and the need for infrastructure financing.

The DMO data shows that as of Q1 2024, Nigeria's public debt stood at N121.67 trillion (US$91.46 billion). By December 2024, it further increased to N144.67 trillion.

Source: Legit.ng