MTEF report shows reliance on multilateral lenders, rising commercial debt, and growing strain on public finances
The Federal Government obtained a total of $1.08 billion in foreign loans in 2024, drawing largely from multilateral, bilateral, and commercial sources to plug budget deficits and fund key development projects amid weak revenue performance and rising debt obligations.
Details contained in the 2026–2028 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper, released by the Budget Office of the Federation, show that Nigeria’s external borrowing strategy during the year was designed to combine lower-cost concessional loans with more expensive commercial financing.
The document revealed that multilateral institutions provided the largest portion of new external loans contracted in 2024. As of December 31, fresh multilateral borrowings stood at $600 million, accounting for 55.7 per cent of total foreign loans obtained during the year.
Bilateral loans were significantly smaller, totalling $1.08 billion, representing about four per cent of Nigeria’s external loan portfolio. This reflects the country’s limited dependence on direct government-to-government financing arrangements.
Commercial borrowing, however, remained a notable component of Nigeria’s external debt mix. According to the Budget Office, Eurobond issuances contributed $148 million, or 13.8 per cent, of total external loans in 2024, while syndicated loans amounted to $280 million, representing 26 per cent of the foreign debt contracted during the period.
The report noted that loans obtained from multilateral and bilateral lenders were largely concessional, offering longer repayment periods and lower interest rates, while Eurobonds and syndicated loans were contracted strictly on commercial terms.
It explained that the current borrowing structure helped to limit debt servicing costs, as a higher reliance on concessional funding reduced the interest burden that would have resulted from heavier exposure to commercial loans.
“Given that almost half of the borrowing is from concessionary sources, it reduces the interest payment burden that would have been incurred from commercial loans,” the document stated.
The foreign borrowings formed part of broader deficit-financing measures in 2024, a year characterised by persistent revenue shortfalls, currency depreciation, and elevated inflationary pressures.
According to the MTEF/FSP, Nigeria’s total public debt stood at $94.2 billion as of December 31, 2024. External debt accounted for $45.7 billion, representing 48.5 per cent of the total, while domestic debt made up the remaining balance.
The Federal Government alone was responsible for $86.8 billion, or more than 92 per cent, of the total public debt stock.
Despite efforts to manage borrowing costs, debt servicing remained a major fiscal concern. Total debt service payments rose to ₦13.12 trillion in 2024, consuming 46 per cent of Federal Government expenditure and 77.5 per cent of retained revenue, underscoring the heavy strain debt obligations continue to place on public finances.
The Budget Office reaffirmed the government’s commitment to debt sustainability, noting that future borrowing decisions would continue to be guided by cost-risk considerations and focused on projects with strong growth and development impact.
It also stressed that improving domestic revenue mobilisation, particularly from non-oil sources, was essential to reducing Nigeria’s dependence on borrowing and easing the fiscal pressure created by rising debt service costs.
Meanwhile, figures from the Debt Management Office (DMO) show that Nigeria’s total public debt climbed to ₦152.40 trillion as of June 30, 2025, up from ₦149.39 trillion at the end of March.
This represents a quarterly increase of ₦3.01 trillion, or 2.01 per cent. In dollar terms, the debt stock rose from $97.24 billion to $99.66 billion, reflecting a 2.49 per cent increase.
Nigeria’s external debt stood at $46.98 billion (₦71.85 trillion) in June, compared with $45.98 billion (₦70.63 trillion) in March. Multilateral lenders remained the country’s largest creditors, with total exposure of $23.19 billion, accounting for 49.4 per cent of external debt.
The World Bank, through its International Development Association (IDA), emerged as Nigeria’s single largest creditor, with $18.04 billion outstanding.
Bilateral loans totalled $6.20 billion, led by the Export-Import Bank of China at $4.91 billion, alongside smaller exposures to France, Japan, India, and Germany. Commercial borrowings stood at $17.32 billion, made up almost entirely of Eurobonds, which account for 36.9 per cent of the external debt portfolio.
An additional $268.9 million was owed under syndicated facilities and commercial bank loans. While Eurobonds and other commercial instruments expose Nigeria to global market volatility, the heavy concentration of multilateral debt highlights continued reliance on concessional financing.
Development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, has raised concerns over Nigeria’s rising debt profile.
While acknowledging that borrowing is not inherently harmful, Ilias questioned the justification for increased borrowing at a time when the government claims to be recording higher revenues. He recalled that following the removal of fuel subsidy, President Bola Tinubu announced improved revenue inflows.
He also pointed to revenue surpluses declared by the Federal Inland Revenue Service and the Nigeria Customs Service, arguing that these should have reduced the need for aggressive borrowing.
According to Ilias, the impact of the current debt trajectory is evident in declining public service delivery, particularly capital expenditure, as debt servicing consumes a growing share of government revenue.
He warned that the resulting crowding-out effect limits job creation, fuels inflation, and worsens foreign exchange imbalances, adding that the scale of borrowing witnessed within the Tinubu administration’s first two years raises serious fiscal sustainability concerns.
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