Debt servicing surpasses capital spending by N3.9tn in two years

Debt servicing in Nigeria outpaced capital expenditure by N3.9tn over the previous two years, highlighting rising fiscal pressures on the federal funds, in line with a media temporary obtained by The PidomNigeria on Sunday from the Federal Ministry of Finance.

The temporary additionally confirmed that the Federal Authorities spent N27.2tn servicing public debt between 2024 and 2025.

The doc by the Particular Adviser to the Minister of Finance and Coordinating Minister of the Economic system on Media and Communications, Dr Ogho Okiti, defined that the rise in debt servicing prices over the two-year interval was largely pushed by macroeconomic changes, significantly the depreciation of the naira and better home rates of interest.

Information contained within the temporary confirmed that the Federal Authorities spent N12.63tn on debt servicing in 2024, considerably above the N8.56tn offered within the funds for the yr. In 2025, debt service funds rose additional to N14.57tn, exceeding the N13.12tn budgeted for the yr.

Mixed, the figures point out that the Federal Authorities spent about N27.2tn on debt obligations throughout the two-year interval, reflecting the rising fiscal stress from rising curiosity prices and alternate fee changes.

A year-on-year comparability confirmed that debt servicing elevated by N1.94tn between 2024 and 2025, representing a 15.4 per cent enhance. The information additionally revealed that the precise spending on debt servicing exceeded funds projections in each years.

In 2024, debt servicing overshot the funds by about N4.07tn, as precise funds rose to N12.63tn in contrast with the N8.56tn initially authorized.

The overshoot moderated in 2025 however remained important, with precise spending of N14.57tn exceeding the N13.12tn funds by N1.45tn.

General, debt servicing exceeded funds projections by about N5.52tn throughout the 2 years. Based on the temporary, the rise in debt servicing was largely pushed by macroeconomic elements slightly than new borrowing.

The doc defined that alternate fee actions considerably elevated the naira worth of exterior debt obligations.

It said, “Exterior debt is denominated in international forex. When the naira depreciates, the naira price of servicing the identical greenback debt rises mechanically. It is a valuation impact and never proof of latest borrowing.”

The temporary additionally linked the rise in debt servicing prices to increased home rates of interest following tighter financial coverage aimed toward stabilising inflation and the alternate fee. It famous that rates of interest rose because the Central Bank of Nigeria tightened financial coverage, which in flip elevated the price of servicing home debt devices.

An evaluation of Federal Authorities funds additionally confirmed that debt servicing absorbed a big portion of presidency income through the interval beneath assessment. Based on the doc, the Federal Authorities’s combination income rose from N12.48tn in 2023 to N20.98tn in 2024, reflecting improved tax administration, stronger remittance self-discipline, and development in non-oil income sources.

With debt servicing reaching N12.63tn in 2024, the federal government spent about 60 per cent of its income on debt obligations that yr. By November 2025, Federal Authorities income had reached N22tn, whereas debt service funds stood at N14.57tn, indicating that about two-thirds of income was used to service debt.

This exhibits that the debt service-to-revenue ratio rose from about 60 per cent in 2024 to roughly 66 per cent by November 2025.

Regardless of the stress from debt servicing, the federal government maintained comparatively excessive capital spending through the interval. Complete capital expenditure stood at N11.59tn in 2024, with a efficiency fee of 84 per cent, whereas N11.7tn had been spent on capital initiatives as of November 2025, representing 76 per cent efficiency.

The information confirmed that in 2024, the N12.63tn spent on debt servicing exceeded capital expenditure by about N1.04tn. In 2025, the hole widened additional, as debt servicing of N14.57tn exceeded capital spending of N11.7tn by about N2.87tn.

Throughout the 2 years, debt servicing exceeded capital expenditure by about N3.91tn. The ministry famous that the notion that capital initiatives weren’t being applied was inaccurate, explaining that federal capital spending consists of each direct funds releases to ministries, departments and businesses and project-tied loans from growth companions.

It defined that multilateral and project-tied loans are disbursed instantly by growth companions and are tied to particular infrastructure and social initiatives. “These initiatives proceed even when MDA money releases are restricted,” the doc said.

The temporary additionally highlighted broader fiscal reforms undertaken by the Federal Authorities since 2023, significantly the choice to halt what it described because the unlawful and extreme use of Methods and Means advances from the Central Bank of Nigeria.

Based on the ministry, these overdrafts had gathered to about N30tn and have been beforehand not transparently mirrored within the fiscal deficit framework. The doc defined that the advances had now been securitised and formally recognised throughout the public debt framework, enhancing transparency in public finance reporting.

It said that deficits are actually financed by way of structured borrowing devices topic to legislative oversight slightly than financial financing. The temporary famous that the transition has tightened fiscal area within the brief time period however is meant to revive macroeconomic credibility and strengthen long-term fiscal sustainability.

The ministry additionally addressed issues about Nigeria’s rising public debt inventory, explaining that a good portion of the rise in nominal debt figures displays accounting changes and alternate fee actions slightly than contemporary borrowing.

It said that about N30tn in Methods and Means advances had now been formally recognised throughout the debt framework, whereas alternate fee changes considerably elevated the naira worth of exterior debt. Based on the doc, about N70tn of the nominal enhance in public debt is attributable to alternate fee valuation results.

The ministry maintained that debt sustainability must be assessed utilizing indicators such because the debt-to-GDP ratio, debt service-to-revenue ratio, fiscal deficit trajectory, and income development developments, slightly than focusing solely on the nominal dimension of public debt.

The temporary additionally highlighted the influence of oil income shortfalls on the Federal Authorities’s funds. In 2025, projected oil and gasoline federation income was N37.4tn, however precise inflows amounted to about N7tn, representing 19 per cent efficiency.

Based on the doc, if the projections had been realised, the Federal Authorities would have acquired roughly N15tn extra in income. It famous that oil revenues have a better proportional allocation to the Federal Authorities in contrast with different income sources, which means shortfalls have an effect on the Federal Authorities extra considerably than states and native governments.

The ministry concluded that Nigeria’s fiscal pressures mirror a transition from what it described as hidden deficits and financial financing to a framework primarily based on transparency and market-based financing. “The administration has chosen long-term sustainability over short-term phantasm,” the doc said.

The PidomNigeria earlier reported that debt service and personnel prices swallowed greater than the Federal Authorities’s complete income for the primary seven months of 2025, at the same time as receipts fell sharply beneath goal and capital initiatives suffered deep cuts.

The Programme Supervisor of the Sustainable Nigeria Programme at Heinrich Böll Stiftung, Mr Ikenna Ofoegbu, warned concerning the excessive price of borrowing within the financial system. Based on him, income is being swallowed by debt funds.

“Our debt servicing is about 60 per cent to 70 per cent. It has come down from about 80 per cent to 90 per cent. So now we’re about 60 per cent to 70 per cent,” he stated.

He criticised the shortage of transparency. “Sadly, we’re not coping with the type of leaders that we are able to belief, no matter they are saying or their intentions. We can’t belief the system. We can’t belief our flesh pressers,” he stated. “I don’t know the final time we noticed all these experiences publicly.”

Ofoegbu added that capital spending was unclear. “Many people could not know, however there’s no capital funds to start with. I feel the one individual that appears to be working in my very own eye view is Wike,” he stated.

The Government Director of Centre for Inclusive Social Improvement, Mr Folahan Johnson, stated the human influence of debt shouldn’t be ignored. “The true price of money owed is the out-of-school little one, the out-of-school woman,” he stated. “The true price of money owed is {that a} lady who has to do enterprise loses her life due to lack of entry to fundamental maternal well being care.”

In its Overview of the Nigerian Economic system in 2025 and Outlook for 2026, the Centre for the Promotion of Personal Enterprise flagged the projected N15tn debt service invoice for the 2026 monetary yr, saying that it might have an effect on the expansion anticipated for the yr.

Nigeria’s rising debt-service invoice is ready to stay a significant constraint on fiscal efficiency, its Chief Government Officer, Dr Muda Yusuf, stated within the assessment.

“Debt service, estimated at over N15tn within the 2026 appropriation (about 50 per cent of projected income), continues to constrain fiscal area,” stated Yusuf, noting that the scenario limits the federal government’s capability to fund capital expenditure and ship growth-enhancing initiatives.

In a current evaluation, Meristem Securities famous, “Public debt is anticipated to rise additional, pushed by increased home borrowings and elevated exterior commitments, significantly given the broader 2026 funds deficit of N23.85tn (in comparison with N14.10tn in 2025). Debt service development could average as cease charges pattern decrease following the February MPR minimize.

“The DMO can also be anticipated to leverage beneficial exterior charges and improved investor confidence, whereas sustained alternate fee stability ought to assist comprise near-term exterior debt servicing pressures.”