Nigeria’s Domestic Debt Hits ₦87 Trillion as Treasury Bills Surge

Nigeria’s Federal Government domestic debt has climbed to ₦87 trillion.

The rise is driven largely by a sharp increase in short-term Treasury Bills (NTBs). This is causing some concerns over refinancing pressures and the cost of servicing debt.

The latest analysis of the domestic debt profile showed the stock rose 5.0% quarter-on-quarter and 13.6% year-on-year to ₦87 trillion at the end of Q2 2026. It stood at ₦82.9 trillion in Q1 2026 and ₦76.6 trillion in Q2 2025.

The increase underscores the Federal Government’s continued dependence on the domestic debt market. Authorities are simultaneously trying to strengthen revenue mobilisation and contain fiscal pressures.

NTBs primarily drove the rise in domestic borrowing. Treasury Bill obligations jumped by ₦2.9 trillion, or 17.6% quarter-on-quarter, to ₦19.5 trillion. NTBs alone accounted for 71% of the ₦4.1 trillion quarterly increase in the domestic debt stock.

The trend points to growing reliance on short-term instruments. That could expose the government to higher refinancing requirements as maturing obligations are rolled over or replaced.

FGN Bonds Still Dominate The Portfolio

FGN bonds remained the largest component of the domestic debt portfolio. They accounted for 74.5% of total domestic debt. The bond stock rose 2.2% quarter-on-quarter and 6.9% year-on-year to ₦64.8 trillion.

Of the total FGN bond stock, naira-denominated bonds accounted for ₦41.5 trillion. Securitised Ways and Means advances stood at ₦22.1 trillion. FGN US dollar-denominated bonds accounted for another ₦1.3 trillion.

The balance of the domestic debt stock, valued at about ₦2.7 trillion, comprises promissory notes, FGN Sukuk, savings bonds, green bonds and other securities.

The latest increase extends a sustained upward trajectory. Between Q2 2024 and Q2 2026, the domestic debt stock grew by approximately ₦16.6 trillion, or 24%.

Analysts said the headline debt figure should be assessed against the size of the economy and the government’s revenue capacity.

On a standardised basis, the ₦87 trillion domestic debt stock represents about 20.2% of Nigeria’s 2025 Gross Domestic Product. Based on projected 2026 GDP, the ratio falls to about 17%.

This suggests the absolute size of domestic debt, though substantial, remains moderate relative to the economy. Analysts said the immediate fiscal challenge lies in the relationship between debt obligations and revenue.

Refinancing Risk And Revenue Capacity

The elevated debt-service burden relative to government revenue remains a key concern. A growing portion of domestic borrowing is now concentrated in shorter-term instruments.

The rising NTB component could increase how often the Federal Government must return to the domestic market to refinance maturing obligations.

This could become significant if interest rates remain elevated and investors continue to demand competitive yields on government securities.

The Federal Government remains one of the largest issuers in the domestic fixed-income market. Increased borrowing can influence liquidity conditions, benchmark yields and the allocation of funds within the financial system.

A greater concentration of government borrowing in short-term securities could also affect the balance between government financing needs and private-sector access to domestic capital.

The increase in domestic debt presents a mixed picture. On one hand, the relatively modest debt-to-GDP ratio provides room for the government to manage its obligations without an immediate solvency concern.

Cost of Debt Rising

On the other hand, the composition and cost of the debt remain critical.

The growing reliance on NTBs means a larger portion of obligations must be refinanced over shorter periods. Any sustained increase in borrowing costs could translate into higher debt-service expenditure.

The issue matters because Nigeria’s fiscal challenge has historically been less about the absolute level of debt than about weak revenue capacity relative to debt-service obligations.

As domestic debt rises, the government’s ability to expand its revenue base will determine whether the borrowing trajectory is sustainable.

For investors, the trend could sustain strong demand for government securities, especially among banks and pension funds.

For the government, the challenge is to channel borrowing towards productive investments that expand output and strengthen future revenue.

With NTBs accounting for 71% of the latest quarterly increase, the sustainability question is shifting. It is no longer just how much Nigeria owes, but how frequently it must refinance what it owes — and at what cost.