Report: Nigeria’s debt burden is overstated by FX volatility and accounting reforms.

• Interest rates and Naira devaluation, not new borrowing, drive debt pressure

• Real debt rose 3% over three years

Nigeria’s concerns about debt sustainability are largely driven by high interest rates and exchange‑rate volatility rather than by excessive new borrowing, a report by The Briefing – Macro & Markets states.

The report counters growing worries that the country is slipping into a debt crisis, arguing that such claims rely mainly on nominal Naira figures that do not account for FX distortions and historical liabilities.

It notes that Nigeria’s public debt increased sharply from N49.8 trillion in March 2023 to N159.2 trillion by December 2025 – an apparent rise of more than 200 percent – but that most of the jump is not due to fresh borrowing.

Instead, the increase is largely attributed to the formal recognition of previously unrecorded obligations and the sharp depreciation of the Naira, which inflated the local‑currency value of external debts.

The report highlights two main drivers of the spike: the securitisation and recognition of about N30 trillion in Ways and Means advances that the Central Bank of Nigeria had been borrowing but were not on official debt records.

It states, “For years, the government quietly borrowed from the central bank. About N30 trillion of that was never on the official list. In 2023 they finally added it in. The debt was always there – they just wrote it down.”

The report also points to the sharp depreciation of the Naira following the foreign‑exchange market reforms and unification policy introduced in 2023 as a key reason for the swelling debt stock.

It estimates that nearly N43 trillion was added to the debt stock simply from revaluing existing foreign‑currency obligations after the Naira fell from about N460 per US$ in March 2023 to about N1,500 per US$ by December 2025.

The Briefing explains, “Nigeria owes some money in dollars. When the naira got weaker, those same dollar loans suddenly counted as a much bigger number in naira. About N43 trillion of the ‘increase’ was just this maths – not new debt. A $100 loan now costs far more naira on paper.”

It notes that the exchange‑rate adjustment created the impression of a massive debt accumulation even though no new loans were taken.

When the debt stock is measured in dollars rather than naira, the picture changes markedly. The report says Nigeria’s total public debt was about $108.2 billion in March 2023 and rose only marginally to $110.9 billion by December 2025, a real increase of roughly three per cent over almost three years.

The document argues that the more pressing issue is the rising cost of servicing obligations amid high interest rates and weak government revenues, not the absolute size of the debt stock.

Domestic interest rates climbed from about eight per cent in 2023 to as high as 24 per cent in 2024 before moderating to about 17 per cent, significantly raising debt‑service costs.

It adds, “It’s like a homeowner whose mortgage rate suddenly doubled – same house, same loan, but the monthly bill got brutal.”

The publication also rejects conclusions based solely on nominal debt levels, insisting that globally accepted debt‑sustainability frameworks focus on ratios such as debt‑to‑GDP and debt‑service‑to‑revenue.

The report states that Nigeria’s debt‑to‑GDP ratio was 36.1 per cent in 2025, below the global average of about 92 per cent and significantly lower than the United States’ ratio of about 116 per cent.

Meanwhile, Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, responded to the report by saying, “Concerns about Nigeria’s debt sustainability should be assessed within the framework of globally accepted debt‑sustainability principles, rather than relying on the nominal size of debt stock, which is neither a threshold nor a determinant of sustainability anywhere in the world.”

“There is no jurisdiction globally where debt sustainability is evaluated based on the absolute nominal value of public debt. Sustainability is determined by a country’s capacity to service its obligations over time, not by headline debt figures,” he added.

Oyedele explained that drawing conclusions solely from nominal debt levels is methodologically flawed and potentially misleading, as it ignores macroeconomic size, revenue capacity, currency composition, maturity structure, and debt dynamics.

He said the increasing share of domestic borrowing mainly reflects the depth and absorptive capacity of Nigeria’s domestic financial market, rather than heightened solvency risk.

“Domestic debt being largely denominated in local currency poses materially lower repayment risk compared to foreign‑currency obligations,” he noted.

“A useful parallel is the United States, where total public debt stood at approximately US$36.2 trillion as of April 2026, equivalent to about 116% of GDP. Despite the large nominal figure, sustainability concerns are limited precisely because the debt is largely US‑dollar denominated and financed domestically.”

“The same logic applies, in proportional terms, to Nigeria’s domestic debt structure, though legitimate concerns around crowding‑out effects remain valid and continue to be monitored,” he said.

He added, “Using June 2023 as a base period for nominal comparisons creates a distorted narrative. A more appropriate reference point is March 2023, when the exchange rate was approximately N460 per US$, compared to about #770 per US$ by June 2023, following the unification of the foreign‑exchange market.”

“This adjustment was a corrective transparency measure, implemented when net FX reserves had fallen below US$4 billion, alongside an FX backlog exceeding $7 billion. Comparing debt stocks across periods without adjusting for this structural FX break significantly overstates the real change in debt.”

According to him, “As of March 2023, Nigeria’s total public debt stood at $108.2 billion. By December 2025, this had increased marginally to $110.9 billion, representing a real increase of about three per cent over nearly three years. This presents a far more accurate picture of debt accumulation than naira‑denominated figures.”

“While the naira value of public debt rose sharply from #49.8 trillion in March 2023 to N159.2 trillion in December 2025, a nominal increase exceeding 200 per cent, this primarily reflects accounting and valuation effects, not excessive new borrowing.”