A policy brief by the Alliance for Economic Research and Ethics LTD/GTE has warned that Nigeria’s rising debt and poor revenue performance are pushing the country into a serious fiscal crisis.
The report said the situation has become more than a debt problem, describing it as a revenue and governance emergency. It noted that the Federal Government is now using more money to service debt than it actually retains as revenue.
Titled “Nigeria Is Borrowing to Breathe and the Clock Is Ticking,” the brief stated that Nigeria’s public debt increased from N87.38 trillion in June 2023 to N159.28 trillion by the end of 2025.
The organisation said President Bola Tinubu’s administration accounted for about N65.9 trillion of that increase within its first two years in office.
It argued that the figure was disturbing when compared with Nigeria’s debt history, noting that the country accumulated about N12.06 trillion in public debt between 1960 and 2015, while the current administration added more than five times that amount in only two years.
The think tank, however, noted that successive governments also contributed to the country’s worsening debt position. It recalled that Nigeria had an opportunity to reset its finances after former President Olusegun Obasanjo secured debt relief from the Paris Club in 2005 and paid off a major part of the country’s external obligations.
According to the report, that period gave Nigeria a rare chance to build strong fiscal reserves, supported by oil revenues and the Excess Crude Account, but the country later returned to heavy borrowing.
The brief stated that by 2015, under former President Goodluck Jonathan, Nigeria’s debt had reached N12.06 trillion, although debt servicing was still within a manageable range. The Report added that the debt stock rose sharply under former President Muhammadu Buhari, moving from N12.06 trillion in 2015 to N87.38 trillion by June 2023.
The organisation said the biggest concern was not just the total size of the debt but the pressure debt repayment was placing on government revenue. It explained that while Nigeria’s debt-to-GDP ratio of about 35.5 per cent may appear comfortable compared to some other African countries, the debt service-to-revenue ratio presents a more worrying picture.
Further Analysing the report, POLITICS NIGERIA discovered that Nigeria’s debt service-to-revenue ratio was at 116.8 per cent in 2024 and only dropped slightly to 113 per cent in the first quarter of 2025. The Government spent N696.27 billion on debt servicing, while retained revenue for the same period stood at N483.47 billion.
What this means is that the government is effectively spending more to repay creditors than it is earning which is very dangerous to long term economic stability based on the fact that Nigeria’s tax-to-GDP ratio remains around 8.2 per cent, far below the Sub-Saharan African average of 15 per cent.
Another troubling development is the N25.3 trillion deficit in the 2026 budget which is above the three per cent limit provided under the Fiscal Responsibility Act. Continued borrowing and deficit financing could also put more pressure on the naira, fuel inflation and make it harder for private businesses to access credit.
The current high-interest-rate environment is already affecting businesses, reducing their ability to expand, hire workers and contribute meaningfully to growth. The report urged the Nigerian Government to put more emphasis on revenue generation and tax reform.
The report recommended a full digitisation of tax collection, expansion of taxation to digital and informal sector activities, better transparency in public finance, and stronger enforcement of the Fiscal Responsibility Act.
