Debt servicing hits ₦3.14tn in Q1

The Federal Government spent ₦3.14 trillion servicing domestic debt in Q1 2026, driven by higher interest rates, though the debt-to-GDP ratio declined to 32.3%.

Data released by the Debt Management Office (DMO) revealed that the Federal Government spent ₦3.14 trillion servicing domestic debt during the first quarter of 2026, driven primarily by higher interest rates. Despite the interest outlay, Nigeria’s overall debt-to-GDP ratio declined to 32.3%.

The decline in the debt-to-GDP ratio is a positive sign. It suggests that the economy is growing faster than the debt, reducing the country’s vulnerability. However, the ₦3.14 trillion spent on debt servicing is a significant drain on the budget, leaving less for infrastructure, healthcare and education.

This mirrors the 2018 debt servicing burden, which also consumed a significant portion of the budget. The mechanism then was different, but the result was the same: a government struggling to balance debt servicing with investment.

The winners: the Nigerian government, which has reduced the debt-to-GDP ratio; and investors, who see a less vulnerable economy. The losers: Nigerian taxpayers, who fund the debt; and the Nigerian public, who lose out on public services.

Bottom Line: Nigeria spent ₦3.14 trillion on debt servicing in Q1. The debt-to-GDP ratio fell. The question is whether the government can sustain the momentum.