By Parrot Newspaper Fresh $24bn Borrowing Could Push Nigeria’s Public Debt to N183 Trillion
By Ricky Awodi
May 28, 2025
Nigeria is on the brink of a significant expansion in its public debt profile as President Bola Tinubu formally seeks approval from the National Assembly to secure new foreign loans totaling approximately $24.14 billion.
At the official exchange rate of ₦1,583.74 to $1, this fresh borrowing is set to add roughly ₦38.24 trillion to Nigeria’s debt stock, raising total public debt from ₦144.67 trillion at the end of 2024 to an estimated ₦182.91 trillion by 2026.
The loan package comprises $21.54 billion, €2.19 billion, and ¥15 billion, which converts to about $24.14 billion in total when adjusted for current exchange rates. This new inflow will increase Nigeria’s external debt from $45.78 billion to nearly $69.92 billion, a 52.7% surge in foreign obligations.
Debt Dynamics and Currency Impact
Data from the Debt Management Office reveals that Nigeria’s total public debt swelled by 48.58% from ₦97.34 trillion in 2023 to ₦144.67 trillion in 2024. Both domestic and external borrowing rose substantially, with the depreciation of the naira significantly inflating the local currency value of foreign debt.
External debt jumped 83.89%, from ₦38.22 trillion ($42.5 billion) to ₦70.29 trillion ($45.78 billion), while domestic debt grew by 25.77%, rising from ₦59.12 trillion to ₦74.38 trillion during the same period. Notably, federal government borrowing increased, while states and the Federal Capital Territory adopted a more conservative debt approach, reducing their debt stock from ₦5.86 trillion to ₦3.97 trillion.
The Federal Government’s debt currently stands at ₦133.33 trillion—₦70.41 trillion domestic and ₦62.92 trillion external. The proposed borrowing alone would push this figure up by nearly 29%.
Purpose and Implications of Borrowing
President Tinubu’s borrowing request, detailed in a letter to the House of Representatives, aligns with the 2025–2026 rolling borrowing programme aimed at funding critical sectors such as infrastructure, agriculture, healthcare, education, water resources, security, and public finance reforms. According to the Presidency, projects backed by this loan have undergone rigorous technical and economic evaluation and are designed to drive economic growth, create jobs, and improve public service delivery.
In addition to the $24.14 billion external loan, the President has proposed a $2 billion foreign currency-denominated bond issuance within the domestic market. This move seeks to deepen Nigeria’s financial markets, attract local dollar investments, bolster foreign exchange reserves, and stabilize the naira exchange rate. However, foreign currency bonds will add to debt servicing costs due to repayment obligations in foreign currency.
Furthermore, the government plans to issue ₦758 billion in bonds to clear outstanding pension liabilities, a move aimed at easing retirees’ financial burdens and restoring confidence in the pension system. This aligns with the Pension Reform Act 2014 and was approved earlier this year by the Federal Executive Council.
Fiscal Risks and Debt Sustainability Concerns
While these borrowings aim to support development, economists caution against escalating debt without corresponding economic returns. The combined impact of the new loans, bonds, and pension-related debt could push Nigeria’s public debt well beyond ₦182.91 trillion, excluding additional domestic borrowing expected to cover budget deficits in 2025 and 2026.
Upcoming debt obligations, including a $1.118 billion Eurobond maturing in November 2025 and ongoing Special Drawing Rights charges of about $30 million annually, will further strain Nigeria’s tight fiscal space.
Johnson Chukwu, CEO of Cowry Assets Management, emphasized that the critical issue is not the size of the borrowing but its deployment. “The key focus must be on transparency and efficiency. How the government utilizes these funds will determine whether this debt will translate into sustainable growth or exacerbate Nigeria’s fiscal vulnerabilities,” he said.
Fresh $24bn Borrowing Could Push Nigeria’s Public Debt
With Nigeria’s debt servicing costs already a major concern, the effectiveness of these new borrowings in catalyzing growth and job creation will be pivotal to ensuring economic stability in the years ahead.