• Interest payments gulp N2.97tn, 95% of total domestic obligations
Festus Akanbi
The federal government spent N3.14 trillion on servicing its domestic debt in the first quarter of 2026, representing an increase of 20.3 per cent from N2.61 trillion recorded in the corresponding period of 2025, the latest report from the Debt Management Office (DMO) has revealed.
The figures, according to Nairametrics, underscored the growing pressure of interest payments on the federal government’s finances, as N2.97 trillion, or about 95 per cent of the total domestic debt-service expenditure during the quarter, went into interest payments, leaving only N169.68 billion for principal repayments.
The N3.14 trillion domestic debt-service bill was also 37.5 per cent higher than the N2.28 trillion recorded in the fourth quarter of 2025, reflecting a sharp acceleration in the cost of servicing the federal government’s domestic obligations at the beginning of the year.
An analysis of the DMO figures showed that domestic debt-service payments rose steadily during the quarter, from N741.82 billion in January to N967.67 billion in February and N1.43 trillion in March.
Interest payments alone increased from N726.38 billion in January to N967.67 billion in February, then climbed to N1.28 trillion in March, bringing the total interest bill for the three months to N2.969 trillion.
Federal Government of Nigeria (FGN) bonds remained the biggest source of the interest burden, accounting for about N1.96 trillion during the quarter. This comprised approximately N1.90 trillion on conventional FGN bonds and N61.97 billion on the FGN US Dollar Bond.
Nigerian Treasury Bills (NTBs) accounted for another N1.003 trillion in interest payments, comprising N262.57 billion in January, N258.90 billion in February and N481.47 billion in March. Interest payments on FGN Savings Bonds stood at N4.24 billion.
The figures indicated that for every N100 the federal government spent on servicing its domestic debt in the first quarter, approximately N95 went to interest payments, while only about N5 went to principal repayments.
The development also represented a significant deterioration from the corresponding period of 2025, when interest payments stood at N2.37 trillion and principal repayments amounted to N241.91 billion.
A breakdown of the comparative figures showed that interest on NTBs rose from N960.72 billion in the first quarter of 2025 to N1.003 trillion in the first quarter of 2026, while payments on FGN bonds jumped from about N1.40 trillion to N1.96 trillion over the same period.
Interest on FGN Savings Bonds similarly increased from N2.72 billion in the first quarter of 2025 to N4.24 billion in the corresponding period of 2026.
The rising domestic debt-service burden comes against the backdrop of the federal government’s continued reliance on the domestic debt market to finance budget deficits and meet expenditure obligations.
Nigeria’s total public debt stock stood at N159.35 trillion as of March 31, 2026, representing a marginal increase from N159.28 trillion at the end of December 2025. The figure compares with N87.38 trillion as of June 30, 2023.
The latest numbers, therefore, reinforce concerns over the cost, rather than merely the size, of Nigeria’s growing debt portfolio, particularly as elevated domestic interest rates translate into higher refinancing and debt-service obligations for the government.
However, while the cost of servicing domestic obligations increased sharply, Nigeria recorded a significant moderation in its external debt-service payments during the review period.
According to the DMO, the country spent $954.06 million on servicing external debt in the first quarter of 2026, representing a 31.5 per cent decline from the $1.39 billion recorded in the corresponding period of 2025.
The external debt-service expenditure comprised $308.33 million in principal repayments, $623.22 million in interest payments and $22.50 million in other charges.
The year-on-year decline was largely attributable to the significantly lower principal repayment obligation during the quarter. Nigeria had paid $759.58 million in external debt principal in the first quarter of 2025, more than twice the $308.33 million recorded in the first three months of 2026.