Nigeria's public debt has increased significantly, rising by N7.44 trillion to N166.79 trillion in the second quarter of 2026. This surge in debt is attributed to various factors, including the country's economic challenges and its reliance on borrowing to finance its activities. According to the Debt Management Office (DMO), the country's total debt stock stood at N159.35 trillion at the end of March before rising to N166.79 trillion as of June 30.
The breakdown of Nigeria's debt stock reveals that domestic debt accounts for 54.91% of the portfolio, with a value of N91.59 trillion. External debt, on the other hand, stands at N75.19 trillion, representing 45.09% of the total debt stock. The DMO valued the external debt at the Central Bank of Nigeria's official exchange rate of N1,379.1842 to the dollar on June 30. This valuation is crucial in understanding the country's debt obligations.
Interest payments on external debt have become a significant burden on Nigeria's finances. In the second quarter of 2026, interest payments accounted for $491.73 million, or 56.5%, of the total external debt service payments of $870.73 million. This represents a substantial increase in interest payments, which have become a major challenge for the country's public finances. Commercial creditors received $325.70 million during the period, with no principal repayment recorded under that category.
The federal government remains the dominant borrower in Nigeria, with a significant portion of the country's debt. The government's domestic obligations stand at N87 trillion, while its external debt is N65.77 trillion. States and the Federal Capital Territory (FCT) also have significant debt obligations, with a domestic debt of N4.59 trillion and an external debt of N9.42 trillion. The breakdown of the government's debt portfolio provides insight into the country's debt structure.
FGN bonds form the largest component of the federal government's domestic debt, with a value of N64.84 trillion. This includes N41.47 trillion in naira bonds, N22.11 trillion in securitised Ways and Means advances, and a domestic dollar bond valued at N1.27 trillion. Nigerian Treasury Bills also account for a significant portion of the domestic debt, with a value of N19.48 trillion. Understanding the composition of the government's debt is essential in assessing its financial situation.
External debt service payments have declined, from $954.06 million in the first quarter to $870.73 million in the second quarter. This reduction of $83.33 million is a positive development, but the country's debt obligations remain significant. Multilateral institutions received the largest share of the second-quarter payments, with a total of $404.22 million. The International Development Association, the African Development Bank, and the International Bank for Reconstruction and Development were among the institutions that received payments.
The latest debt stock of N166.79 trillion is nearly double the N87.38 trillion recorded at the end of 2025. This significant increase in debt highlights the challenges facing Nigeria's public finances and the need for sustainable debt management strategies. The country's debt situation requires careful management to ensure that it does not become a major obstacle to economic growth and development.
Key points
- Nigeria's public debt has surged to N166.79 trillion in Q2 2026.
- Interest payments account for 56.5% of external debt service.
- Domestic debt accounts for 54.91% of Nigeria's total debt stock.
