Nigeria’s public debt climbed to N144.67tn at the end of December 2024, raising fresh concerns about fiscal sustainability as government agencies continued to struggle with full utilisation of capital funds.
A Budget Office report showed that while N5.81tn was released and cash-backed to Ministries, Departments and Agencies for 2024 capital projects and programmes, only N3.27tn had been utilised as of June 30, 2025.
The figure represents 81.91 per cent of the amount released, showing a persistent gap between budget funding and actual implementation.
What the Debt Numbers Show
The report also showed that Nigeria’s debt-to-GDP ratio rose to 61.22 per cent by the end of December 2024.
According to the Budget Office, that level was above Nigeria’s self-imposed debt threshold of 40 per cent and also exceeded the 56 per cent benchmark cited for comparable economies.
The rising ratio adds to concerns about how much fiscal space the Federal Government has left as debt service obligations take up a significant share of public revenue.
The Budget Office, however, said ongoing reforms aimed at improving tax administration, strengthening non-oil revenue collection, reviewing fiscal incentives and improving remittances from government-owned enterprises could reduce pressure on borrowing over the medium term.
It also identified efforts to close revenue leakages as an important part of improving fiscal sustainability.
Why Economists Are Worried
Chief Executive Officer of CSA Advisory and development economist Aliyu Ilias warned that the pace of borrowing could create additional pressure on the economy, particularly at a time when debt-service costs remain high.
Ilias said borrowing can support economic growth when funds are channelled into productive investments but warned that Nigeria’s existing obligations make additional debt more difficult to justify.
He noted that about N15tn was required for debt servicing under the budget, arguing that further borrowing would increase the government’s financial burden.
He also warned that poorly managed borrowing could contribute to inflation if it leads to excess liquidity without a corresponding increase in productive economic activity.
For Ilias, the critical question is, therefore, not simply whether the government borrows but how effectively the money is deployed.
He argued that Nigeria should place greater emphasis on increasing crude oil production and improving its trade position as alternative ways of strengthening government finances.
Why Borrowing Is Not Always Bad
Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr Olusegun Omisakin, also argued that the quality of spending should be at the centre of the debt debate.
Omisakin said borrowing is common across major economies and that Nigeria’s debt indicators should be considered alongside what the funds are financing.
In his view, concerns about borrowing would be less pronounced if Nigerians could clearly see the impact of debt-funded spending on infrastructure and other productive assets.
The debate therefore goes beyond the size of Nigeria’s debt stock to questions about whether borrowed funds are generating enough economic value to justify their cost.
What Nigeria Needs to Do
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said Nigeria must find ways to slow the growth of its debt and ensure that borrowing remains sustainable.
While acknowledging that borrowing may sometimes be necessary, Yusuf argued that greater revenue mobilisation and stronger fiscal discipline would be critical to reducing the government’s dependence on loans.
He said the country’s recent tax reforms could help ease borrowing pressure if they generate stronger and more sustainable revenue.
The broader challenge for government is to expand revenue without creating excessive additional pressure on businesses and households already dealing with high living and operating costs.
Why Sanusi Questioned More Borrowing
Concerns about Nigeria’s debt have also become part of a wider political debate.
The Emir of Kano and former Central Bank of Nigeria Governor Muhammadu Sanusi II recently questioned why the Federal Government continues to borrow heavily after removing the petrol subsidy, a reform that was expected to free up significant fiscal resources.
Sanusi argued that subsidy removal should have reduced pressure on government finances and warned that continued borrowing could undermine the expected benefits of the reform.
His intervention triggered a response from the Presidency, which defended the government’s borrowing strategy.
Special Adviser on Policy Communication Daniel Bwala said the loans were being used to finance critical infrastructure rather than routine spending.
What the Government Says
The Federal Government has repeatedly argued that public debt should be assessed based on what borrowed funds are used for, rather than the size of borrowing alone.
Officials maintain that borrowing for productive infrastructure can support long-term economic growth where the returns generated exceed the financing costs.
Government officials have also argued that the structure, cost and repayment terms of debt are as important as the headline amount.
The administration’s position is that infrastructure investment financed through borrowing can improve productivity, attract private capital and expand the economy over time.
At the same time, officials acknowledge that Nigeria cannot depend indefinitely on debt as the primary source of development financing.
The government has therefore placed greater emphasis on tax reform, non-oil revenue, improved public-sector collections and stronger fiscal management.
Why the Debt Question Matters
The combination of rising debt, high debt-service obligations and incomplete capital-budget execution points to a deeper challenge in Nigeria’s public finances.
Borrowing can support development when funds are deployed efficiently, but its economic value depends on whether projects are completed, productivity improves, and government revenues eventually rise.
Nigeria’s immediate challenge is therefore not only to manage the size of its debt but also to improve the efficiency of public spending.
With public debt at N144.67tn and capital utilisation still below full implementation, fiscal reforms will increasingly be judged by whether they can convert higher government revenue and borrowing into measurable economic outcomes.
The sustainability of Nigeria’s debt will ultimately depend less on the headline figure and more on whether the economy grows fast enough, government revenue improves, and borrowed funds produce returns that justify their cost.
