Nigeria's domestic debt-service payments have decreased significantly, according to data from the Debt Management Office (DMO). In the second quarter of 2026, domestic debt-service payments fell to N2.14 trillion, down from N3.14 trillion recorded in the first quarter. This decline represents a 31.8 per cent quarter-on-quarter reduction. Despite this decrease, the country's overall public debt stock increased during the period.
The DMO data showed that interest and rental payments accounted for N1.98 trillion of the second quarter debt-service bill, while principal repayments stood at N164.28 billion. Interest payments on FGN bonds, Nigerian Treasury Bills (NTBs), FGN Sukuk, FGN Savings Bonds, and the FGN Green Bond contributed to the total debt-service bill. FGN bonds accounted for the largest portion of domestic debt-service costs, with interest payments reaching N1.39 trillion during the quarter.
The Federal Government of Nigeria (FGN) paid N530.84 billion in FGN bond interest in April, N332.49 billion in May, and N525.05 billion in June. Interest payments on NTBs totalled N488.80 billion, comprising N180.64 billion in April, N201 billion in May, and N107.16 billion in June. Additionally, FGN Sukuk rental payments stood at N92.29 billion, while interest payments on FGN Savings Bonds and the FGN Green Bond amounted to N4.66 billion and N5.56 billion respectively.
The figures highlight the continued dominance of interest obligations in Nigeria's domestic debt-service burden. Principal repayments represented only N164.28 billion of the second quarter total. June accounted for the largest share of principal repayments, at N136.96 billion, comprising N66.27 billion in local-currency-denominated promissory notes and N70.69 billion in foreign-currency-denominated promissory notes.
The government also repaid N24.68 billion in local-currency promissory notes in April and N2.64 billion in May. The second quarter reduction in domestic debt servicing followed a sharp increase in the first quarter, when payments rose to N3.14 trillion from N2.28 trillion in the fourth quarter of 2025.
According to the DMO, total public debt increased from N159.35 trillion at the end of March to N166.79 trillion by June 30. Domestic debt accounted for N91.59 trillion, or 54.91 per cent, while external debt stood at N75.20 trillion. Economist and fixed-income analyst, Segun Ogundipe, noted that the divergence between debt accumulation and quarterly servicing costs should be interpreted cautiously.
Experts say a fall in quarterly debt service does not necessarily mean that the underlying debt burden has eased, as payment schedules, maturities, and refinancing arrangements can cause significant variations between quarters. Ogundipe added that Nigeria's sovereign fixed-income market offered relatively high yields in early 2026 before an easing cycle gradually pushed returns lower across the yield curve.
Key points
- Nigeria's domestic debt service payments decreased to N2.14 trillion in Q2 2026, a 31.8% quarter-on-quarter reduction.
- Interest payments accounted for N1.98 trillion of the second quarter debt-service bill.
- Total public debt increased from N159.35 trillion at the end of March to N166.79 trillion by June 30.
