Market News

The Debt Management Office (DMO) has released the quarterly debt stock data for Q3 ’2025. Nigeria’s public debt increased marginally by 0.6% quarter-on-quarter (QoQ) and 7.7% year-on-year (YoY) to N153.3trn as of September 2025. While Nigeria’s overall debt burden has continued to rise, the pace of this increase has slowed in recent quarters. This moderation can be primarily attributed to the reduced volatility of the naira, which has helped stabilise the FX-denominated component of the nation’s debt stock. This marks a notable shift from the period of heightened exchange rate volatility following the naira’s float in June 2023, when the naira depreciation significantly increased the external debt in naira terms and led to a sharp rise in the overall debt burden.

• Nigeria’s external debt stock increased modestly to US$48.5bn in Q3, from US$47.0bn in the previous quarter. However, despite the higher dollar-denominated borrowings QoQ, the value of external debt in naira terms declined over the period.
• The naira equivalent value of external debt fell marginally by 1% QoQ to N71.5trn. On a YoY basis, however, the external debt stock in naira terms rose by 4%.
• This outcome reflected the stronger performance of the naira during the quarter, with the exchange rate appreciating to N1,474.85/USD, compared with N1,529.21/USD used in the prior quarter.
• Regarding the domestic component, the value of domestic debt stock grew by 2% QoQ to N81.8trn. The YoY increase was more pronounced at 19%.
• In terms of composition, domestic and external debt accounted for 53.4% and 46.6% of total public debt, respectively.
• This mix reflects a minor deviation from the Medium-Term Debt Management Strategy (MTDS) MTDS 2024–2027 benchmark, which prescribes a 55%:45% balance between domestic and external borrowing.
• When standardised, the total public debt stock of N153.3trn translates to an FY2025 debt to GDP ratio of around 36%, well below the DMO’s self-imposed ceiling of 60%.
• Nigeria’s overall debt burden is expected to continue rising, driven by the large fiscal deficit of N25.3trn projected for 2026, a sizeable increase from N13.5trn for 2025.
• Continued stability in the naira, alongside an anticipated decline in domestic yields, could help moderate the pace of debt accumulation (see chart below)