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The Federal Government spent ₦3.14 trillion servicing its domestic debt in the first quarter of 2026, with interest payments accounting for the overwhelming majority of the expenditure, according to the Debt Management Office (DMO).
The latest domestic debt service report from the agency shows that the government devoted ₦2.97 trillion to interest payments and another ₦169.68 billion to principal repayments between January and March 2026.
The figures highlight the continued pressure domestic borrowing places on government finances, particularly as a large portion of debt-service expenditure goes toward interest rather than reducing outstanding obligations.
March Records Sharpest Increase
Domestic debt servicing accelerated significantly during the quarter.
The government spent ₦741.82 billion in January, followed by ₦967.67 billion in February. Expenditure climbed further to ₦1.43 trillion in March, making the final month of the quarter responsible for almost half of the total amount spent.
March’s figure represented a 47.7% increase compared with February’s ₦967.67 billion and was 92.7% higher than the ₦741.82 billion recorded in January.
The sharp month-on-month increase pushed total first-quarter domestic debt service above the ₦3 trillion mark.
Interest Payments Dominate Debt Service
Interest obligations constituted approximately 94.6% of the government’s total domestic debt service during the quarter.
Federal Government bonds accounted for the largest portion of interest payments, at approximately ₦1.96 trillion.
Interest payments on Treasury Bills followed with about ₦1 trillion, while the government spent an additional ₦4.24 billion on interest relating to FGN Savings Bonds.
The composition underscores how debt-servicing costs can continue to weigh heavily on government finances even when principal repayments remain comparatively modest.
₦169.68bn Used for Principal Repayments
Compared with interest expenses, principal repayments were significantly smaller during the review period.
The DMO reported ₦169.68 billion in principal repayments, consisting of repayments on local-currency-denominated promissory notes.
The relatively small principal component means that most of the ₦3.14 trillion spent during the quarter went toward servicing the cost of existing domestic borrowing rather than directly reducing the principal owed.
Public Debt Reaches ₦159.35trn
The debt-service figures come against the backdrop of a marginal increase in Nigeria’s overall public debt.
Nigeria’s public debt rose by 0.01% to ₦159.35 trillion in the first quarter of 2026.
The movement suggests that while the government’s debt stock remained broadly stable during the period, the cost of servicing existing obligations continues to represent a significant fiscal burden.
President Bola Ahmed Tinubu had earlier said Nigeria would spend approximately $11.6 billion on debt servicing in 2026, underlining the scale of the country’s overall debt-service commitments.
Rising Debt-Service Costs Remain a Fiscal Challenge
The latest DMO figures highlight a key challenge facing Nigeria’s fiscal management: controlling the cost of borrowing while funding government expenditure and development priorities.
With interest payments consuming most of the domestic debt-service budget, changes in borrowing costs and the structure of government securities could have a significant impact on future expenditure.
The concentration of payments in March also demonstrates how debt-service obligations can fluctuate considerably from month to month, depending on the timing of scheduled payments.
For policymakers, managing the country’s debt profile will therefore require balancing new borrowing needs against the cost of servicing existing obligations.
As Nigeria continues its fiscal reforms, the trajectory of domestic debt servicing will remain an important indicator of the government’s financial flexibility and its capacity to direct more resources toward infrastructure, social programmes and economic development.
