FG Debt Hits Record

Nigeria’s public debt stress has climbed to its highest level on record, according to a new Debt Burden Index (DBI) developed to measure the nation’s true fiscal pressure. The report, published by the Nigerian Economic Summit Group (NESG) during its annual conference in Abuja, revealed that between 2020 and 2023, Nigeria’s index peaked at 83.6 points, reflecting the severe strain caused by pandemic-era borrowing, falling revenues, and surging debt service costs that exceeded total government income.

The report described Nigeria’s debt framework as structurally weak and fiscally unsustainable, underscoring the urgent need for comprehensive reform. According to The PUNCH, as of August 2025, Nigeria spent $2.86 billion servicing external debt, slightly below the $3.06 billion recorded in the same period of 2024. This represents 69.1% of total foreign payments of $4.14 billion during the period under review, highlighting the weight of external debt obligations.

The NESG report identified four distinct phases in Nigeria’s debt evolution from 2006 to 2024. The Post-Relief Compression Phase (2006–2014) saw relatively low index levels averaging below 10 points, supported by debt relief and high oil revenues. The Debt Crisis Acceleration Phase (2015–2019) followed, with debt stress intensifying as oil price shocks, growing domestic borrowing, and weak revenue mobilisation pushed the index beyond 30 points.

The Fiscal Exhaustion Phase (2020–2023) represented the peak of Nigeria’s debt vulnerability, reaching 83.6 points, driven by COVID-19 borrowing, revenue collapse, and debt servicing consuming more than 100% of total government revenue. A Tentative Reversal Phase (2024–2025) has since emerged, with the index easing slightly to 70.9 points, and an estimated 69.0 points in the first quarter of 2025. This modest improvement was supported by fuel subsidy removal and foreign exchange reforms, though the report cautioned that fiscal pressures remain severe.

Unlike traditional debt-to-GDP ratios, the Debt Burden Index offers a more holistic measure of fiscal sustainability, combining indicators of solvency, liquidity, and revenue strength into a single benchmark. “Nigeria stands at a critical turning point in its fiscal trajectory,” the analysis stated. “While headline debt figures may appear moderate by international standards, the index exposes a deeper reality of structural weakness, fiscal fatigue, and vulnerability to foreign exchange shocks.”

The report warned that despite mild relief in 2024, rising debt obligations continue to erode fiscal space, limiting development spending and threatening macroeconomic stability. It urged policymakers to pursue a fundamental restructuring of borrowing strategies, strengthen fiscal institutions, and overhaul the national revenue framework to restore sustainability.

According to the NESG, the path forward lies not in austerity but in strategic fiscal management based on transparency, productivity, and equity. It recommended that new borrowing should be tied strictly to growth-inducing projects capable of generating measurable economic returns.

The Debt Burden Index was constructed using five globally recognised indicators endorsed by the IMF and World Bank, including domestic and external debt-to-GDP ratios, debt service-to-exports, and debt service-to-revenue metrics. Beyond measurement, the index serves as a policy tool to promote fiscal discipline and accountability in government borrowing.

The NESG also emphasised the urgency of domestic revenue reforms, such as improving value-added tax collection, enforcing mining royalties, and expanding digital property taxation. It advocated stronger private sector engagement through public-private partnerships (PPPs), equity-based infrastructure financing, and citizen-led investment in public goods.

Furthermore, the report called for a shift towards net worth-based debt management, ensuring that any increase in liabilities is matched by a proportional rise in national assets. It concluded by urging deep institutional reforms to enhance debt transparency, coordinate subnational borrowing, and enforce rules-based fiscal governance key steps necessary to prevent Nigeria’s debt from becoming an enduring drag on growth and development.