A new policy brief released by the Alliance for Economic Research and Ethics LTD/GTE has raised concerns over Nigeria’s worsening fiscal condition, warning that the country may be heading towards a major economic crisis due to rising debt and weak revenue generation.
Newsonspot reports that the report, titled “Nigeria Is Borrowing to Breathe and the Clock Is Ticking,” described the current situation as not just a debt problem, but a deeper governance and revenue emergency. According to the organisation, the Federal Government is now spending more on debt servicing than it actually earns as retained revenue.
Data from the report showed that Nigeria’s total public debt rose from N87.38 trillion in June 2023 to N159.28 trillion by the end of 2025. It noted that President Bola Tinubu’s administration accounted for approximately N65.9 trillion of the increase within its first two years in office.
The think tank compared the current figures with Nigeria’s historical debt profile, stating that the country accumulated only N12.06 trillion in debt between 1960 and 2015, while the current administration added more than five times that amount in just two years.
The report, however, acknowledged that previous administrations also contributed to the growing debt burden. It recalled that former President Olusegun Obasanjo secured debt relief from the Paris Club in 2005, creating an opportunity for Nigeria to rebuild its finances through oil earnings and the Excess Crude Account. Despite that opportunity, the country gradually returned to heavy borrowing.
According to the report, Nigeria’s debt stood at N12.06 trillion by 2015 under former President Goodluck Jonathan, with debt servicing still considered manageable at the time. Under former President Muhammadu Buhari, the debt stock reportedly surged from N12.06 trillion in 2015 to N87.38 trillion by June 2023.
The organisation stressed that the biggest concern is not just the total debt figure, but the increasing pressure debt repayment is placing on government revenue. While Nigeria’s debt-to-GDP ratio currently stands at about 35.5 percent, which appears moderate when compared with some African countries, the debt service-to-revenue ratio presents a far more troubling reality.
Analysis of the report revealed that Nigeria’s debt service-to-revenue ratio reached 116.8 percent in 2024 and slightly declined to 113 percent in the first quarter of 2025. During the same period, the government reportedly spent N696.27 billion on debt servicing, while retained revenue stood at only N483.47 billion.
The report warned that spending more on loan repayment than actual earnings poses a serious threat to Nigeria’s long-term economic stability, especially as the country’s tax-to-GDP ratio remains around 8.2 percent, significantly below the Sub-Saharan African average of 15 percent.
It also highlighted concerns over the proposed N25.3 trillion deficit in the 2026 budget, noting that it exceeds the three percent threshold allowed under the Fiscal Responsibility Act. The report warned that continued borrowing and deficit financing could further weaken the naira, worsen inflation and reduce access to credit for private businesses.
According to Newsonspot , the organisation, Nigeria’s current high-interest-rate environment is already hurting businesses by limiting expansion opportunities, reducing employment capacity and slowing economic growth.
To address the crisis, the report urged the Federal Government to focus more on revenue generation and tax reforms. Recommendations included the full digitisation of tax collection, expansion of taxation into digital and informal sectors, improved transparency in public finance management and stricter enforcement of the Fiscal Responsibility Act.
