Nigeria’s debt sustainability concerns are driven more by elevated interest rates and exchange rate volatility than excessive new borrowing, according to a report by The Briefing – Macro & Markets.

This is just as the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, has insisted that growing concerns about Nigeria’s debt sustainability should be assessed within the framework of globally accepted debt sustainability principles, rather than relying on the nominal size of debt stock, which is neither a threshold nor a determinant of sustainability anywhere in the world.

It would be recalled that the Oracle Intelligence had reported that a fresh World Bank loan request by the federal government is nearing approval, which would raise the country’s total public debt profile to N160.98 trillion.

This figure is a sharp rise from the N87.38 it stood, as at the assumption of office of President Bola Tinubu, in 2023.

According to data released by the Debt Management Office (DMO) the country’s total public debt stood at about N87.38 trillion when President Tinubu assumed office in June 2023.

With Nigeria set to secure another major loan from the World Bank as a proposed $1.25bn facility moves closer to final approval, the country’s debt becomes even more worrying, according to analysts who have questioned the timing of the loan, as it coincides with the 2027 electioneering campaigns.

The loan, tagged; Nigeria Actions for Investment and Jobs Acceleration, is expected to come before the World Bank’s Board of Executive Directors for approval on June 26, 2026.

Meanwhile, addressing the concerns of Nigerians over the country’s rising debt profile, The Briefing-Macro & Markets in its latest report argued that recent narratives suggesting that the country was sliding into a debt crisis were misleading because they relied heavily on nominal Naira figures without adjusting for FX distortions and historical liabilities.

The publication maintained that while Nigeria’s public debt rose sharply from N49.8 trillion in March 2023 to N159.2 trillion by December 2025, representing an apparent increase of over 200 per cent, much of the jump did not arise from fresh borrowing.

Instead, it said the increase was largely driven by the formal recognition of previously unrecorded obligations as well as the sharp depreciation of the Naira, which significantly inflated the local currency value of external debts.

The report identified two major factors behind the spike, namely; the securitisation and recognition of about N30 trillion in Ways and Means advances previously owed the Central Bank of Nigeria (CBN) but excluded from official debt records.

“For years, the government quietly borrowed from the central bank. About N30 trillion of that was never on the official list. In 2023 they finally added it in. The debt was always there — they just wrote it down,” the report read.

It also identified the sharp depreciation of the Naira following the foreign exchange market reforms and unification policy introduced in 2023 as one of the reasons why official debt swelled.

The report said nearly N43 trillion was added to the debt stock merely from the revaluation of existing foreign currency obligations after the Naira weakened from about N460/$ in March 2023 to about N1,500/$ by December 2025.

“Nigeria owes some money in dollars. When the naira got weaker, those same dollar loans suddenly counted as a much bigger number in naira. About N43 trillion of the ‘increase’ was just this maths – not new debt. A $100 loan now costs far more naira on paper.”

It pointed out that the exchange rate adjustment created the impression of a massive debt accumulation even where no fresh loans were contracted.

The report stated that when the debt stock was measured in dollar terms, instead of naira, the picture changed significantly. It said Nigeria’s total public debt was about $108.2 billion in March 2023 and rose only marginally to $110.9 billion by December 2025, representing a real increase of approximately three per cent over nearly three years.

The document maintained that the more critical issue confronting the country was not the size of the debt stock itself, but the rising cost of servicing obligations amid elevated interest rates and weak government revenues.

It stated that domestic interest rates surged from about eight per cent in 2023 to as high as 24 per cent in 2024, before moderating to about 17 per cent, significantly increasing debt service costs.

The report said: “It’s like a homeowner whose mortgage rate suddenly doubled — same house, same loan, but the monthly bill got brutal.”

The publication also dismissed conclusions drawn from debt burden methodologies based purely on nominal debt levels, insisting that globally accepted debt sustainability frameworks focus instead on ratios, such as debt-to-GDP and debt service-to-revenue.

The report stated that Nigeria’s debt-to-GDP ratio stood at 36.1 per cent in 2025, below the global average of about 92 per cent, and significantly lower than the United States’ ratio of about 116 per cent.

Meanwhile, further reacting to the report, the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, said concerns about Nigeria’s debt sustainability should be assessed within the framework of globally accepted debt sustainability principles, rather than relying on the nominal size of debt stock, which is neither a threshold nor a determinant of sustainability anywhere in the world.

According to the minister, this is why the country’s Debt Management Office (DMO) in line with IMF/World Bank methodology, conducts Debt Sustainability Analysis (DSA) using ratios and stress scenarios rather than nominal stock comparisons.

‘Using June 2023 as a base period for nominal comparisons creates a distorted narrative. A more appropriate reference point is March 2023, when the exchange rate was approximately N460/US$, compared to about #770/$ by June 2023, following the unification of the foreign exchange market.

“This adjustment was a corrective transparency measure, implemented when net FX reserves had fallen below US$4 billion, alongside an FX backlog exceeding $7 billion. Comparing debt stocks across periods without adjusting for this structural FX break significantly overstates the real change in debt.

“As of March 2023, Nigeria’s total public debt stood at $108.2 billion. By December 2025, this had increased marginally to $110.9 billion, representing a real increase of about three per cent over nearly three years. This presents a far more accurate picture of debt accumulation than naira-denominated figures.

“While the naira value of public debt rose sharply from #49.8 trillion in March 2023 to N159.2 trillion in December 2025, a nominal increase exceeding 200 per cent. This primarily reflects accounting and valuation effects, not excessive new borrowing,” the minister stated.