The Federal Government spent N5.28tn on servicing its domestic debt between January and June 2026, with interest and rental payments accounting for the bulk of the expenditure, according to data from the Debt Management Office (DMO).
The figures show that N4.95tn went into interest and rental payments on government securities, while N333.96bn was used to repay the principal on promissory notes during the six-month period.
The expenditure highlights the pressure domestic debt obligations continue to place on government finances amid competing demands for infrastructure, healthcare, education and other essential public services.
Federal Government bonds accounted for the largest share of interest payments, gulping N3.35tn between January and June. Nigerian Treasury Bills followed with N1.49tn in interest costs.
Together, the two debt instruments accounted for the overwhelming share of the government’s domestic debt-servicing expenditure during the period.
Monthly payments on Federal Government bonds fluctuated considerably, rising from N462.44bn in January to N707.25bn in February before peaking at N792.34bn in March.
The amount subsequently declined to N530.84bn in April and N332.49bn in May before rising again to N525.05bn in June.
Interest payments on Treasury Bills totalled N1.49tn, with March recording the highest monthly outlay of approximately N481.47bn.
Other domestic debt instruments also attracted payments during the period. The government spent N92.29bn on rentals for Federal Government Sukuk, while interest payments on FGN Savings Bonds stood at N8.90bn. Green bond interest payments amounted to N5.56bn.
The figures indicate that conventional government bonds and Treasury Bills remained the dominant contributors to the cost of servicing Nigeria’s domestic debt in the first half of 2026.
FG Repays N333.96bn on Promissory Notes
Beyond interest and rental payments, the Federal Government repaid N333.96bn in principal on promissory notes between January and June.
March accounted for N154.23bn of the repayments, while June recorded N136.96bn, making them the largest monthly contributors to principal repayments during the period.
Of the total, N263.27bn was associated with naira-denominated promissory notes, while foreign-currency-denominated notes accounted for N70.69bn.
The government’s total monthly domestic debt service, covering interest, rentals and principal repayments, also varied throughout the six-month period.
March recorded the highest expenditure at N1.43tn, followed by February at N967.67bn.
June’s total stood at N811.62bn, while April recorded N765.19bn and January N741.82bn. May had the lowest monthly outlay at N567.16bn.
The variations reflect the timing of interest obligations and principal repayments across the government’s domestic debt instruments.
Economist Warns Against Rising Debt Costs
The growing cost of servicing domestic debt has raised concerns about the proportion of government resources committed to meeting financial obligations, potentially leaving less funding available for development projects and public services.
An Abuja-based economist, Nonso Iheoma, warned that heavy spending on domestic debt repayments could constrain the government’s ability to address critical development needs.
“If you keep spending this huge amount on repaying your local debt, you will be left with less for important development issues,” Iheoma said.
He argued that although borrowing remained necessary, the government could reconsider its sources of financing to reduce the pressure associated with high borrowing costs.
“Though we can’t do without debts, we can do well by changing the sources of the debts. During this period, returns on fixed-income securities exceeded or were close to 20 per cent due to high interest rates,” he added.
Nigeria’s total debt-service expenditure reached approximately N16tn in 2025, reflecting the combined burden of domestic interest payments and external debt obligations.
