Debt servicing surpasses capital spending by N3.9tn in two years

Edun

Debt servicing in Nigeria outpaced capital expenditure by N3.9tn over the past two years, highlighting growing fiscal pressures on the federal budget, according to a media brief obtained by The PUNCH on Sunday from the Federal Ministry of Finance.

The brief also showed that the Federal Government spent N27.2tn servicing public debt between 2024 and 2025.

The document by the Special Adviser to the Minister of Finance and Coordinating Minister of the Economy on Media and Communications, Dr Ogho Okiti, explained that the rise in debt servicing costs over the two-year period was largely driven by macroeconomic adjustments, particularly the depreciation of the naira and higher domestic interest rates.

Data contained in the brief showed that the Federal Government spent N12.63tn on debt servicing in 2024, significantly above the N8.56tn provided in the budget for the year. In 2025, debt service payments rose further to N14.57tn, exceeding the N13.12tn budgeted for the year.

Combined, the figures indicate that the Federal Government spent about N27.2tn on debt obligations within the two-year period, reflecting the growing fiscal pressure from rising interest costs and exchange rate adjustments.

A year-on-year comparison showed that debt servicing increased by N1.94tn between 2024 and 2025, representing a 15.4 per cent increase. The data also revealed that the actual spending on debt servicing exceeded budget projections in both years.

In 2024, debt servicing overshot the budget by about N4.07tn, as actual payments rose to N12.63tn compared with the N8.56tn initially approved.

The overshoot moderated in 2025 but remained significant, with actual spending of N14.57tn exceeding the N13.12tn budget by N1.45tn.

Overall, debt servicing exceeded budget projections by about N5.52tn across the two years. According to the brief, the increase in debt servicing was largely driven by macroeconomic factors rather than new borrowing.