KEY POINTS

• Nigeria’s debt service payments dropped 38.5 percent to $405.3 million in January 2026.
• Full-year 2025 payments also fell, declining 2.95 percent to $7.22 billion.
• Nigeria’s domestic debt stock hit N77.81 trillion as of September 2025.

Nigeria’s debt service bill came in significantly lighter at the start of 2026, with fresh data from the Central Bank of Nigeria showing the federal government spent 38.5 percent less servicing its debt in January than it did a year earlier.

Nigeria debt service payments totalled $405.3 million in January 2026, down from $659.7 million recorded in January 2025, according to the CBN’s International Payment report. The decline extended a broader downward trend that played out across the full year 2025, when total debt service payments fell 2.95 percent to $7.22 billion from $7.44 billion in 2024. The numbers point to meaningful shifts in how Nigeria is managing its debt obligations, at least in the short term.

What Drove the Drop

The decline was concentrated in two of Nigeria’s most significant domestic debt instruments: Federal Government Bonds and Nigerian Treasury Bills. Both account for the bulk of Nigeria’s domestic debt service load, and lower yields in the fixed-income market combined with reduced primary market issuances helped pull costs down during the review period.

Nigeria debt service payments also benefited from a compression in yields that reduced interest obligations on outstanding instruments, giving the government some breathing room on the fiscal side heading into 2026.

The Debt Management Office raised N5.26 trillion through the FGN bond market in 2025 to fund the federal budget deficit, with total investor subscriptions reaching N8.96 trillion, a figure that underscored strong appetite from fixed-income investors despite tighter conditions.

Domestic Debt Stock Keeps Climbing

The fall in debt service costs does not mean Nigeria’s debt profile is shrinking. As of September 30, 2025, Nigeria’s domestic debt stock had grown to N77.81 trillion, driven by continued FGN bond issuances to cover budget gaps. In January 2026, the DMO oversubscribed its initial N900 billion bond target, raising N1.54 trillion across three instruments.

That dynamic, lower servicing costs alongside a growing debt pile, reflects a market where yields have compressed even as the government continues to borrow heavily. Whether that compression holds as the Middle East crisis rattles global markets and domestic inflation pressures persist remains an open question analysts and fiscal observers will be watching closely through the rest of 2026.