Sopuruchi Onwuka

President Bola Tinubu’s declaration that the worst pains of his economic reforms are over is being tested by a debt burden that has continued to expand, potentially extending fiscal pressures even as the government shifts its emphasis towards delivering shared prosperity.

In his Independence Day broadcast, Tinubu said the “emergency treatment is over” and that “the foundation has been repaired”, pointing to improvements in key macroeconomic indicators as evidence that the economy is moving beyond the most difficult phase of his reform programme.

But while the administration highlights improving growth and other macroeconomic indicators, households and businesses continue to confront elevated living and operating costs. The removal of the petrol subsidy, in particular, has pushed pump prices up by more than 500 per cent since 2023, while transportation costs continue to feed into consumer prices.

And besides the inflationary trends sparked off by withdrawal of fuel subsidy and subsequent jumps in transportation costs is the growing concern over Nigeria’s expanding debt stock.

The country’s external debt has risen by about $11.4 billion or N16 trillion since Tinubu assumed office in 2023, increasing from approximately $43.1 billion (N60.34 trillion) to $54.5 billion (N76.3 trillion) by June 2026.

The increase reflects the Federal Government’s growing reliance on external financing to support reforms, fund budget deficits and finance development programmes.

The expansion has been driven substantially by multilateral borrowing, particularly from the World Bank, alongside Eurobond issuances and syndicated financing. Nigeria’s World Bank debt rose from about $15.4 billion (N21.6 trillion) to $20.7 billion (N29 trillion) during the period.

Major financing approved under the Tinubu administration included $2.25 billion (N3.2 trillion) for economic reforms in June 2024, $1.57 billion (N2.2 trillion) for the HOPE and SPIN programmes in September 2024 and $1.08 billion (N1.5 trillion) for education and resilience programmes in March 2025.

The government is also seeking another $1.25 billion (N1.8 trillion) World Bank facility to support access to finance, digital services and electricity, alongside reforms in taxation, trade and agriculture.

Nigeria returned to the international capital market in December 2024 with a $2.2 billion (N3.1 trillion) Eurobond, comprising $700 million (N980 billion) maturing in 2031 and $1.5 billion (N2.1 trillion) due in 2034. Another $2.35 billion (N3.3 trillion) Eurobond followed in November 2025, bringing the proceeds from the two issuances to $4.55 billion (N6.4 trillion).

The government also secured a $1.8 billion (N2.5 trillion) syndicated loan from First Abu Dhabi Bank, while a $5 billion (N7 trillion) derivatives financing arrangement was agreed in 2026, of which $1.5 billion (N2.1 trillion) had been drawn by June.

Although the Federal Government has maintained that no oil revenues or strategic national assets were pledged as collateral under the financing arrangement, concerns have emerged over the complexity and transparency of derivatives-based borrowing.

The International Monetary Fund has raised concerns in this area, while Fitch has also highlighted liquidity and creditor recovery risks.

Nigeria’s domestic debt increased from about N59.1 trillion to N91.5 trillion over the period.

According to the Debt Management Office (DMO), total public debt stood at N166.79 trillion as of June 30, 2026, comprising N91.59 trillion in domestic debt and N75.20 trillion in external debt.

The Federal Government accounted for the bulk of the obligations, with total debt of about N152.77 trillion, while states and the Federal Capital Territory accounted for approximately N14.01 trillion.

According to the DMO, the figures underline the fiscal challenge confronting the administration as it attempts to finance infrastructure and sustain its reform programme while managing rising debt-service obligations.

Domestic debt owed by Nigeria’s 36 states and the Federal Capital Territory rose to N4.59 trillion in June 2026, up from N4.52 trillion in March. Although the 1.49 per cent quarterly increase was slower than the 3.74 per cent growth recorded between December 2025 and March 2026, the longer-term trend remains upward.

Lagos retained the largest subnational domestic debt at N1.20 trillion, accounting for 26.03 per cent of the total. Delta followed with N369.30 billion, while the FCT had N358.79 billion and Rivers N354.64 billion. Edo, Ogun, Bauchi, Niger, Cross River and Benue completed the group of the 10 largest debtors.

Together, the 10 states and the FCT accounted for N3.22 trillion, or more than 70 per cent of total subnational domestic debt.

The quarterly figures also reveal sharply different borrowing patterns. Delta’s debt rose 72.69 per cent, from N213.85 billion in March to N369.30 billion in June, while Edo’s increased 24.69 per cent to N214.93 billion.

By contrast, the FCT reduced its debt by 7.97 per cent to N358.79 billion, while Ogun recorded a 5.83 per cent decline. Rivers, Cross River and Benue also reduced their debt positions.

On a year-on-year basis, subnational domestic debt increased by N627.35 billion, or 15.83 per cent, from N3.96 trillion in June 2025.

The borrowing trajectory has therefore created a second layer of fiscal pressure for an economy already struggling to translate headline reforms into improved household welfare.

The administration’s argument that borrowing is necessary to finance infrastructure and economic transformation remains central to its fiscal strategy. But the economic case for such borrowing ultimately rests on whether borrowed resources generate productive capacity, expand government revenues and create sufficient economic activity to support repayment.

Thus, the debt debate directly clashes with Tinubu’s promise that the period of acute economic pain is coming to an end.

For households that have endured sharply higher transport, energy, food and operating costs since the reforms began, macroeconomic improvement remains meaningful only if it eventually translates into lower inflationary pressure, stronger purchasing power and improved economic opportunity.

The central question is therefore shifting from whether Nigeria can borrow to sustain the reform programme to whether the resulting debt can be converted into productive assets and stronger revenues before debt servicing itself becomes a constraint on the prosperity the government promises to deliver.

Oracle Intelligence reports that whereas Tinubu boasts of an end of the emergency phase, the size and trajectory of Nigeria’s public debt mean that the fiscal consequences of the reform era are likely to remain a defining feature of the economy long after the glossy political broadcasts have faded into the oblivion.