The Federal Government reduced its debt service spending sharply in early 2026. Payments dropped by 38.5 per cent year-on-year to $405.3 million in January 2026, down from $659.7 million recorded in January 2025.
Data from the Central Bank of Nigeria (CBN) International Payments Report revealed the decline.
Nigeria also recorded a slight drop in total debt service payments in 2025. Government payments fell by 2.95 per cent to $7.22 billion in 2025, compared with $7.44 billion in 2024.
Lower servicing costs across major domestic debt instruments drove the decline. These instruments include Federal Government of Nigeria (FGN) Bonds and Nigerian Treasury Bills (NTBs).
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Both instruments account for a large share of Nigeria’s domestic debt obligations.
Reduced issuance of government securities also helped cut debt service payments.
Lower yields in the fixed-income market further eased the government’s repayment burden during the review period.
Government Still Raises Funds Through Bonds
Despite the lower servicing costs, the Federal Government continues to depend on domestic borrowing.
The Debt Management Office (DMO) raised ₦5.26 trillion through FGN bonds in 2025 to finance the budget deficit.
Investor demand remained strong. Total subscriptions reached ₦8.96 trillion during the year.
Oversubscription Continues in 2026
The strong demand continued into 2026.
In January 2026, the DMO exceeded its ₦900 billion borrowing target. The agency eventually raised ₦1.54 trillion from the sale of three FGN bonds.
Nigeria’s domestic debt stock continues to grow despite the temporary drop in debt servicing costs.
As of September 30, 2025, domestic debt stood at ₦77.81 trillion. Increased issuance of FGN bonds largely drove the rise.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
