Tinubu economic reforms: Foreign debt drops to $94.22bn from $113bn
By Seun Ibiyemi
The Federal and State Governments appear to have made significant headway in tackling Nigeria’s public debt burden, as new figures reveal a marked reduction in both foreign and domestic debt stocks following a series of economic policy shifts.
According to a debt profile update released by the National Orientation Agency (NOA), Nigeria’s external debt declined from $113.42 billion in 2023 to $94.22 billion by the end of last year. Meanwhile, the combined domestic debt of the 36 states dropped sharply from ¦ 5.82 trillion to ¦ 3.97 trillion.
The NOA attributed this progress to key reforms introduced by the Tinubu administration, particularly the removal of petrol subsidies and the floating of the naira. These measures, the agency explained, resulted in a revenue boost that allowed 33 states and the Federal Capital Territory to repay ¦ 1.85 trillion in domestic debts, thereby easing the debt burden.
Delta State topped the repayment chart, settling ¦ 265.83 billion in liabilities within 18 months. Lagos State followed with ¦ 96.23 billion, while Jigawa State reduced its debt by an impressive 96 per cent, clearing ¦ 41.8 billion of its ¦ 43.13 billion obligations. Ondo State paid off ¦ 61.6 billion out of ¦ 74 billion, cutting its debt by 82 per cent and leaving an outstanding balance of just ¦ 12 billion. Imo, Cross River, and Ogun States also made substantial repayments.
However, three states, Niger, Rivers and Enugu, were named as exceptions, having reportedly increased their borrowing rather than reduce it.
The NOA further disclosed that the Federal Government’s external debt servicing improved significantly. The revenue-to-debt ratio fell from 97 per cent to 65 per cent, and Nigeria’s debt to the International Monetary Fund (IMF) was fully repaid in the second quarter of 2025.
As at June 30, 2023, just one month after President Tinubu assumed office, Nigeria’s debt to the IMF stood at $3.264 billion. By December 2023, that figure had dropped to $2.469 billion, and by the end of 2024, it had declined further to $800.23 million. This final amount was completely cleared in early 2025, a development confirmed by the IMF.
In addition to the IMF repayments, the federal government spent $4.67 billion servicing its external debt in 2024, up from $3.5 billion the previous year. Altogether, the administration committed $7 billion to external debt servicing in its first 18 months in office.
The NOA also noted that the government has begun repaying the ¦ 22 trillion in securitised Ways and Means advances owed to the Central Bank of Nigeria (CBN). Crucially, it has stopped accessing new advances under this facility, opting instead to raise funds from the financial markets to bridge budget deficits.
The roots of Nigeria’s debt accumulation stretch back to 2014, when dwindling revenue allocations from the Federal Government left 30 states struggling to meet payroll and other obligations. This prompted widespread borrowing, pushing state-level debt from ¦ 1.66 trillion in 2014 to ¦ 2.5 trillion in 2015 and eventually ¦ 5.82 trillion by mid-2023.
Some of the steepest increases during that period were recorded in Osun State, which moved from ¦ 37.82 billion in 2014 to ¦ 145.71 billion by June 2023. Delta State’s debt rose from ¦ 211.95 billion to ¦ 465.41 billion, while Jigawa moved from ¦ 1.57 billion to ¦ 43.13 billion. Anambra’s debt profile expanded from ¦ 2.88 billion to ¦ 76.4 billion in the same timeframe.
The tide began to turn in the wake of fuel subsidy removal and the currency float. These reforms triggered a surge in allocations from the Federation Account, increasing state and local government revenues from ¦ 4.792 trillion in 2022 to ¦ 6.16 trillion in 2023, a 28.6 per cent rise. In 2024, this allocation jumped to ¦ 9.58 trillion.
The NOA observed that this increase in fiscal inflow enhanced liquidity and improved the solvency of sub-national governments, allowing them to finance budgets with less dependence on loans.
It remarked: “The financial windfall for states and local governments has resulted in better budget execution without excessive borrowing. Many states, as a result, have launched aggressive debt repayment campaigns.”
Records from the Debt Management Office (DMO) confirm that within just 18 months, the total debt stock of the 36 states and the FCT fell from ¦ 5.82 trillion in June 2023 to ¦ 3.97 trillion by December 2024.
The NOA concluded that while the federal and state governments have made notable progress in reducing debt, sustained fiscal discipline, prudent borrowing, and continued reforms will be essential to keep Nigeria’s public finances on a sustainable path.
