KEY POINTS

• FG borrows N4 trillion above its 2024 target, making N8.93 trillion.
• Domestic, foreign borrowing to finance 2025 budget deficit of N9.22trn.
• Analyst warn rising debt, crowding out private sector borrowing and inflation risks.

Over N4 trillion, or 67 percent, above the FG projected borrowing target for 2024, the Federal Government has breached its own debt ceiling.

The FG’s domestic borrowing originally budgeted at N6 trillion in November 2020 has already hit N8.93 trillion and the intention is to borrow more to hit over N10 trillion by year end.

But the development comes against the backdrop of growing public worry about Nigeria’s swelling debt burden.

Nevertheless, the FG said the budget for next year will equally depend on huge domestic and foreign borrowings to the tune of N9.22 trillion.

According to the Federal Ministry of Budget and Economic Planning the 2025 deficit will be funded through domestic borrowings, foreign loans, multilateral drawdowns as well as proceeds from privatization.

Growing dependence on debt continues to have a bearing on long term economic stability, inflation, and supports for private sector growth according to analysts.

FG borrowing in 2024 broken down

According to data from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN), the FG raised N8.93 trillion domestic investors in the first 11 months of 2024 (11M’24). Here’s a breakdown of the key borrowing components:

– Nigeria Treasury Bills (NTBs): From CBN’s auctions, N1.181 trillion was raised.
– FGN Bonds: N939.246 billion raised.
– FGN Savings Bonds: N14 billion raised.
– October & November borrowings: The NTBs stood at N774.953 billion; FGN Bonds and Savings Bonds stood at N635.752 billion and N7.152 billion respectively.

Borrowing has surged as investors have lapped up the higher interest rates. In February, the CBN raised the Monetary Policy Rate (MPR) to 27.5% from 18.75% in November, and boosted the rate on 364-day NTBs to 12.93% from 22.93%. Also, the interest rates on two-year tenors of FGN Savings Bonds went from 12.28% in December 2024 to 17.48%.

Analysts’ concerns and debt growth

Experts say the rising debt in Nigeria is a cause for concern in terms of its impact on private sector borrowing, inflation and economic stability. By H1 2024, Nigeria’s domestic debt stock stood at N66.96 trillion, or N39.6% up from N48.31 trillion in H1 2023.

Nigeria, analysts add, is now in a ‘debt trap’ using new borrowings to service old debt. Here’s what key financial experts had to say:

– David Adonri, Executive Vice Chairman at Highcap Securities: According to, ‘FG is already in a debt trap which requires new debt to service existing obligations.’ That leaves very little financial resource for economic development.”

– Victor Chiazor, Head of Research at FSL Securities: AAA … the government’s borrowing has fueled inflationary pressures … ‘Too many businesses can no longer afford to borrow at elevated interest rates.’”

– Dr. Muda Yusuf, CEO of CPPE: ‘Printed money for debt only leads to inflation’. If it’s raised through bonds or treasury bills, it’s less inflationary. But the rising domestic debt is a risk to the credit market it crowds out private sector borrowers.”

– Olatunde Amolegbe, former President, CIS: “In general public expenditure is bound to borrow, but one is uncomfortable borrowing to meet recurrent spends. ‘debt should be linked to projects like infrastructure that improve productivity and economic growth’.”

For those who take it out, the rising cost of borrowing is a double edged sword. However, the lure of attractive returns offered by government issued bonds and treasury bills have also created a serious crowding out effect on private sector borrowing. It is reflected in lending rates being higher for corporate borrowers which are skyrocketing beyond the capacity of most small and medium enterprises to access affordable credit.

Consequences for the 2025 fiscal deficit

A total fiscal deficit of N9.05 trillion in 2025 is higher than the N7.8 trillion deficit projected for 2024.

To finance the deficit, the FG is to borrow N9.22 trillion – N8.41 trillion from domestic and foreign sources, N312.33 billion from sale proceeds of federal government of Nigeria enterprises and N3.55 trillion from drawdowns on existing bilateral and multilateral loans.

Lack of opportunity to finance externally will see domestic borrowing account for the bulk of the funding, the ministry of budget and economic planning said. That implies further borrowing in 2024 along the lines foreseen, with whatever consequences may flow for inflation, for the exchange rate and for the general stability of the economy.