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Nigeria's public debt is poised for another substantial increase as President Bola Tinubu has sought the National Assembly’s consent to secure new foreign loans totaling approximately $24.14 billion.
At the current official exchange rate of N1,583.74 per dollar, this proposed borrowing could elevate the existing debt stock by around N38.24 trillion, potentially increasing Nigeria’s total public debt from N144.67 trillion at the close of 2024 to over N182.91 trillion by 2026.
The new loans consist of $21.54 billion, €2.19 billion, and ¥15 billion. According to the latest market exchange rates €1 equating to $1.1381 and ¥1 to $0.0068 the euro portion amounts to about $2.5 billion while the yen converts to approximately $102 million. Altogether, these new loans tally up to an estimated $24.14 billion. When translated at the official rate of N1,583.7388 per dollar, the naira equivalent amounts to N38.24 trillion.
As of December 31, 2024, Nigeria’s total public debt was recorded at N144.67 trillion, as per data provided by the Debt Management Office. This figure reflects a 48.58% increase from the N97.34 trillion reported at the end of 2023.
The increase is largely attributed to considerable rises in both domestic and foreign borrowing, exacerbated by the naira’s depreciation against key foreign currencies.
The exchange rate escalation has notably inflated the local currency value of Nigeria’s external debt, which surged from N38.22 trillion ($42.5 billion) in December 2023 to N70.29 trillion ($45.78 billion) by the end of 2024—a remarkable 83.89% increase. Meanwhile, domestic debt rose from N59.12 trillion to N74.38 trillion during the same timeframe, marking a 25.77% increase.
The Federal Government’s share of this debt grew from N70.41 trillion, up from N53.26 trillion, while the debt owed by states and the Federal Capital Territory dropped from N5.86 trillion to N3.97 trillion, indicating a more prudent approach by local governments.
Should the new borrowing be fully approved, Nigeria’s external debt would rise from $45.78 billion to approximately $69.92 billion an additional $24.14 billion, equating to a 52.7% increase. In naira terms, this would elevate the external debt segment of Nigeria’s overall public debt to over N108 trillion.
This proposed borrowing also signifies a notable increase relative to the Federal Government’s current obligations. As of December 2024, the Federal Government’s debt was N133.33 trillion, comprising N70.41 trillion in domestic debt and N62.92 trillion in external debt.
The added N38.24 trillion would augment this figure by 28.68%. Compared to the national debt of N144.67 trillion, the new loans symbolize a 26.43% increase.
In a communication to the House of Representatives, President Tinubu conveyed that the external borrowing strategy is part of the 2025–2026 rolling borrowing plan aimed at facilitating essential sectors such as infrastructure, agriculture, healthcare, education, water resources, security, and public finance reforms.
He emphasized that the projects encompassed by the plan have undergone technical and economic assessments and were chosen for their capacity to foster growth, create jobs, and enhance public service delivery.
Separately, the President requested approval for a $2 billion foreign currency bond program to be launched within Nigeria’s domestic debt market.
This initiative, falling under the 2023 Presidential Executive Order on Foreign Currency Denominated Financial Instruments, is designed to deepen the domestic financial market, attract local dollar investments, bolster foreign exchange reserves, and assist in stabilizing the exchange rate.
However, this bond will also lead to an increased burden of debt servicing, as it demands repayment in foreign currency. Additionally, President Tinubu seeks legislative support for issuing N757.98 billion in bonds to settle outstanding pension debts under the Contributory Pension Scheme as of December 2023.
According to the Presidency, this move aligns with the Pension Reform Act of 2014 and aims to reduce hardship for retirees, restore confidence in the pension system, and improve morale among public servants. Earlier in the year, the Federal Executive Council approved the bond issuance.
Collectively, these three initiatives, the $24.14 billion external loan, the $2 billion bond program, and the N758 billion pension bond could elevate Nigeria's debt significantly beyond N182.91 trillion.
Furthermore, the N182.91 trillion estimate does not encompass the trillions of naira in domestic debt anticipated to be raised in 2025 and 2026 to bridge budget deficits, nor does it include scheduled debt repayments. Notable repayments due in the near future include a $1.118 billion Eurobond maturing in November 2025.
Nigeria has repaid the $3.4 billion facility from the International Monetary Fund obtained under the Rapid Financing Instrument during 2020. Nonetheless, the country remains liable for annual charges approximating $30 million in Special Drawing Rights. These repayments, along with interest and sinking fund obligations, will further burden Nigeria’s already constrained fiscal situation.
However, Economists are voicing worries regarding the sustainability of the debt associated with the approximately $24 billion external borrowing that President Bola Tinubu presented to the National Assembly on Tuesday.
The experts emphasized the importance of utilizing the borrowing effectively, insisting that mismanagement would only exacerbate the national debt.
The Group Chief Executive Officer of Cowry Assets Management Limited, Johnson Chukwu, expressed skepticism about the Federal Government’s proposed $24.14 billion foreign borrowing, highlighting the crucial need for transparency and effective utilization of the funds.
Chukwu remarked that the primary concern isn’t the loan amount but how it will be utilized. “The fundamental aspect is what the money is being allocated for, which will be the focus for Nigerians," he stated.
Chukwu affirmed that while borrowing may not be inherently problematic, he cautioned against government-led infrastructure projects without demonstrable value. "If the borrowed funds are directed toward assets generating returns exceeding the loan value, then it is justified," he observed.
He warned that inefficient use of the entire loan could become a burden rather than a catalyst for development.
Furthermore, Chukwu stressed the importance of prioritizing private sector partnerships for infrastructure endeavors to minimize expenses, boost efficiency, and ensure better value for investments.
Echoing similar sentiments, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, expressed concern regarding the Federal Government’s increasing debt obligations, particularly the heavy inclination toward external borrowing.
Yusuf cautioned that Nigeria's rising debt service commitments are already exceeding capital expenditure and could potentially hinder essential government operations if not properly managed.
"Debt servicing is already far exceeding the budget for capital spending," he remarked, labeling the trend as unsettling.
He urged the government to prioritize revenue enhancement and fiscal discipline instead of accumulating new debts. "We must exercise caution regarding our debt commitments,” he added.
Yusuf noted that while ongoing economic reforms and improved oil sector output could eventually boost revenue and lessen borrowing requirements, any new external loans must be scrupulously evaluated for cost and intended purpose.
Professor of Economics at Babcock University, Professor Segun Ajibola, supported the Federal Government’s plan to issue a N758 billion bond to address outstanding pension obligations, calling it overdue.
Ajibola expressed concern for senior citizens who have served the nation, lamenting their wait for deserved benefits, especially amid rising inflation and the depreciating value of money.
“If measures can be taken to address the entitlements of those who have served the country, it is long overdue," he stated.
While recognizing the government’s limited fiscal capacity, Ajibola advised against resorting to the Central Bank for money printing as an alternative.
Former Chief Economist at Zenith Bank, Marcel Okeke, criticized the borrowing scheme, claiming it is leading the country deeper into debt rather than steering it out of financial difficulties. "Instead of finding a way out, the economy appears to be regressing,” he noted.
