Nigeria’s Public Debt Recorded Largest Quarterly Increase Since Q3 2024, Rising by NGN7.44 Trillion in Q2 2026

Nigeria’s Public Debt Recorded Largest Quarterly Increase Since Q3 2024, Rising by NGN7.44 Trillion in Q2 2026

Nigeria’s public debt stock increased by NGN7.44 trillion to NGN166.79 trillion in Q2 2026, marking its largest quarter-on-quarter nominal increase since Q3 2024. The 4.67 per cent expansion from NGN159.35 trillion in Q1 2026 represents a sharp reversal from the marginal 0.05 per cent growth recorded in the preceding quarter, signalling renewed fiscal financing pressures. Although the pace of debt accumulation remains below the exceptional increases recorded in early 2024, the latest expansion highlights persistent government financing requirements and reinforces concerns over debt servicing costs, foreign-exchange exposure and the sustainability of public finances.

Chart 1: Total Public Debt Portfolio (NGN Trillion)

Source: Debt Management Office (DMO)

Debt Accumulation and Quarter-on-Quarter Growth Momentum

The Q2 2026 increase represents a notable acceleration in Nigeria’s public debt trajectory, following a prolonged period of slower quarterly growth. Public debt rose from NGN121.67 trillion in Q1 2024 to NGN144.67 trillion by Q4 2024, before reaching NGN159.28 trillion at the end of 2025. The marginal increase of NGN75 billion in Q1 2026 indicated a temporary moderation, but the subsequent NGN7.44 trillion expansion in Q2 signals renewed pressure on government financing requirements.

Chart 2: Nominal Quarter-on-Quarter Nigerian Publics Debt Growth (NGN Trillion)

Source: Debt Management Office (DMO)

While the latest increase is below the NGN8.02 trillion recorded in Q3 2024, it is the largest quarterly nominal expansion since then. The debt stock has risen by approximately 37.1 per cent since Q1 2024, reflecting the cumulative impact of government financing requirements and changes in the valuation of foreign-currency obligations. The latest figures reinforce the importance of distinguishing between new borrowing and valuation-related changes when assessing the underlying fiscal position.

Debt Composition and Foreign-Exchange Exposure

Nigeria’s public debt portfolio in Q2 2026 comprised NGN91.59 trillion in domestic debt, representing 54.91 per cent of the total, and NGN75.20 trillion in external debt, accounting for 45.09 per cent. The domestic-to-external debt ratio of approximately 1.22:1 reflects the greater reliance on local financing, while the substantial external component leaves public finances exposed to exchange-rate movements.

Domestic borrowing reduces direct exposure to foreign-currency repayment obligations but can increase pressure on local liquidity, borrowing costs and private-sector access to credit. Conversely, external financing can provide access to longer-term funding, particularly through concessional multilateral facilities, but currency depreciation increases the naira value of foreign debt and its servicing costs. Maintaining a sustainable balance between the two sources will be important in limiting refinancing risks, containing borrowing costs and preserving fiscal flexibility.

Chart 3: Q2 2026 Nigerian Public Debt Composition

Source: Debt Management Office (DMO)

Debt Servicing and Fiscal Implications

Despite the increase in the public debt stock, debt servicing declined in Q2 2026. Domestic debt servicing fell by 31.8 per cent to NGN2.14 trillion from NGN3.14 trillion in Q1 2026. External debt servicing also declined by 8.7 per cent to $870.73 million from $954.06 million in the preceding quarter.

The quarterly decline provides some near-term fiscal relief but does not necessarily indicate a structural reduction in debt servicing pressures, as payments are influenced by maturity schedules and interest-payment timing. Domestic interest obligations continue to absorb government resources that could otherwise support infrastructure, social programmes and economic development. External repayments, meanwhile, place demands on foreign-exchange resources, increasing exposure to currency volatility and external liquidity constraints. Notably, during the federal government’s reform scorecard presentation by the Minister of Finance, it was noted that debt servicing and higher government spending had largely absorbed savings from fuel subsidy and foreign-exchange reforms, highlighting the continued pressure on fiscal resources.

Outlook

Nigeria’s public debt is expected to remain sensitive to fiscal deficits, revenue performance, exchange-rate movements and the government’s financing strategy. The Q2 2026 rebound highlights the risk that renewed borrowing could reverse the moderation recorded in previous quarters, particularly if revenue growth does not keep pace with expenditure requirements. Although the recent decline in quarterly debt servicing offers temporary relief, the expanding debt stock will continue to create future interest and refinancing obligations.

In the medium to long term, continued stronger non-oil revenue mobilisation, implementation of the Nigerian Tax Act 2025 and improved tax compliance, expenditure rationalisation and prioritisation of productive capital investment will be critical to reducing reliance on additional borrowing. A prudent mix of domestic and concessional external financing, alongside effective maturity management, could help contain interest-rate, refinancing and currency risks. Ultimately, the sustainability of Nigeria’s debt trajectory will depend not only on moderating the pace of accumulation but also on ensuring that borrowed funds generate sufficient economic returns to strengthen revenue capacity and support long-term growth.