Nigeria spent N5.28 trillion servicing its domestic debt in the first half of 2026, raising concerns about the pressure of rising debt obligations on government spending and the funding of critical development projects.
Data from the Debt Management Office (DMO) showed that the Federal Government spent N4.95 trillion on interest and rental payments between January and June, while N333.96 billion went towards repaying the principal on promissory notes.
The expenditure highlights the growing cost of domestic borrowing and the competing demands on public finances, as the government seeks to fund infrastructure, education, healthcare and other essential services.
Government bonds and Nigerian Treasury Bills accounted for the bulk of the interest payments during the six-month period.
Federal Government bonds attracted N3.35 trillion in interest payments, while Treasury Bills accounted for N1.49 trillion, underscoring the significant cost of servicing the two major domestic debt instruments.
Payments on Federal Government bonds fluctuated throughout the period, rising from N462.44 billion in January to N707.25 billion in February before reaching a peak of N792.34 billion in March.
The figure declined to N530.84 billion in April and N332.49 billion in May before increasing to N525.05 billion in June.
Treasury Bill interest payments also contributed significantly to the government’s debt burden, with March recording the highest monthly payment of approximately N481.47 billion.
Other instruments accounted for smaller portions of the expenditure. The government spent N92.29 billion on rentals for Federal Government Sukuk, while interest payments on FGN Savings Bonds and Green Bonds stood at N8.90 billion and N5.56 billion, respectively.
Beyond interest payments, the Federal Government spent N333.96 billion repaying the principal on promissory notes during the period.
Of the amount, N263.27 billion was used to settle naira-denominated promissory notes, while N70.69 billion went towards foreign-currency-denominated notes.
March recorded the highest monthly principal repayment at N154.23 billion, followed by June, when N136.96 billion was paid.
An analysis of total monthly domestic debt servicing showed that March recorded the highest expenditure at N1.43 trillion, followed by February with N967.67 billion.
The government spent N811.62 billion in June, N765.19 billion in April and N741.82 billion in January. May recorded the lowest monthly expenditure at N567.16 billion.
The figures have renewed concerns about the amount of public resources being committed to debt obligations, with economists warning that high borrowing costs could leave the government with less money for capital projects and social services.
An Abuja-based economist, Nonso Iheoma, said excessive spending on domestic debt repayment could reduce the resources available for important development priorities.
“If you keep spending this huge amount on repaying your local debt, you will be left with less for important development issues,” he said.
Iheoma acknowledged that borrowing remained necessary but called for a reassessment of the sources of government debt.
“Though we can’t do without debts, we can do well by changing the sources of the debts. During this period, returns on fixed-income securities exceeded or were close to 20 per cent due to high interest rates,” he added.
Nigeria’s domestic debt-servicing expenditure forms part of a broader fiscal challenge, as the country also has to meet its external debt obligations.
Total debt-service expenditure reached approximately N16 trillion in 2025, highlighting the pressure debt repayments continue to place on government finances.
With domestic borrowing costs remaining substantial, the scale of debt servicing is likely to remain a key consideration in decisions on government borrowing, revenue mobilisation and the allocation of funds to critical sectors of the economy.
