KEY POINTS
- FG borrowed N8.1 trillion domestically in Q1 2026, up 7.4 percent from N7.5 trillion in Q1 2025
- The figure overshoots the N7.3 trillion quarterly benchmark implied by the 2026 Appropriation Act
- World Bank says Nigeria’s debt service-to-revenue ratio hit 49.5 percent in 2025 and crowds out capital spending
FG domestic borrowing reached N8.1 trillion in the first quarter of 2026, a 7.4 percent year-on-year increase from N7.5 trillion in Q1 2025, according to data from the Central Bank of Nigeria and the Debt Management Office. The figure already overshoots the N7.3 trillion quarterly domestic benchmark the 2026 Appropriation Act implies.
Meanwhile, FGN Bonds drove the Q1 surge, climbing 63 percent year-on-year to N3.182 trillion from N1.953 trillion. Treasury Bills declined 12 percent to N4.86 trillion, and FGN Savings Bonds rose 24 percent to N16 billion.
World Bank warns debt crowds out investment
Furthermore, the World Bank flagged the rising cost of servicing FG domestic borrowing as a structural threat to development. In its April 2026 Nigeria Development Update, the bank said the debt service-to-revenue ratio reached 49.5 percent in 2025 and would hold at approximately 41 percent by 2028.
The bank also noted that capital spending declined from 1.3 percent of GDP in 2024 to 1.0 percent in 2025, with the government implementing only 24 percent of its prorated annual capital budget.
Revenue gaps, fiscal indiscipline driving the trend
Analysts pointed to persistent revenue shortfalls as the primary driver. “The most fundamental reason is that government revenue continues to fall short of expectations. When actual receipts miss targets by a wide margin, borrowing becomes the default tool to keep the lights on,” said Dr. Ifeanyi Ubah, Chief Investment Officer at VNL Capital Asset Management.
Additionally, David Adonri of HighCap Securities warned that excessive borrowing crowds out capital from the real sector and exacerbates inflation. However, Ayodele Akinwunmi of United Capital said borrowing channeled into productive infrastructure can generate strong multiplier effects across the economy.
