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The current administration’s efforts to improve fiscal stability through the removal of petroleum subsidies and the liberalisation of the foreign exchange market, despite being a bold step, have yielded little success, as Nigeria’s debt crisis continues to worsen, thus making things more complicated and complex for the economic policy team. The latest figures from the Debt Management Office (DMO) are alarming, showing that the country’s total public debt rose from N144.67 trillion in December 2023 to N149.39 trillion in March 2025, representing a staggering jump of over N4.7 trillion in just three months. This rapid increase in debt raises serious concerns about the government’s spending habits and its ability to manage the economy effectively.
Some experts fear that Nigeria’s debt may reach N200 trillion by December 2025, a projection that cannot be ignored. According to Sagagi, a member of the Monetary Policy Committee (MPC), the government has continued on a path of “unfettered spending,” despite economic pressures mounting. This unchecked spending spree is unsustainable and poses significant risks to the economy, which is already showing significant stress.
Nigeria’s debt crisis is severely impacting the well-being of its citizens, with inflation eroding purchasing power and constraining government spending on essential services, such as healthcare and education. The crisis is also slowing economic growth, resulting in increased unemployment and fiscal instability. When you think the Naira is stabilising, it slumps again, sending panic and making the CBN scramble for a quick-fix solution. This pattern is not sustainable as monetary policies must align with fiscal discipline to yield a desirable impact.
The government’s appetite for borrowing seems insatiable, and this trend must be reversed if Nigeria is to achieve fiscal stability as envisaged by the Central Bank of Nigeria. The Central Bank of Nigeria (CBN) crucial role in economic stabilisation is not in question. MPC member, Lamido Abubakar Yuguda has rightly emphasised the need for the CBN to focus on monetary tightening to combat inflation. The current tight monetary policy stance has shown positive results, with the composite Purchasing Managers’ Index (PMI) rising to 52.3 in June 2025. This indicates that the economy is growing modestly, and domestic investment is responding positively to the increasing certainty engendered by a declining inflation rate and a more stable exchange rate.
However, despite these positive signs, the naira’s value remains a concern. Sagagi projects that the exchange rate will likely hit N1400/$1 by December 2025, while President Bola Tinubu aims to stabilize the exchange rate at N1,500 to the dollar by the end of 2025. The discrepancy between these projections highlights the uncertainty surrounding the economy and the need for more effective policy measures.
The government’s debt management strategy has been called into question, with some experts warning that Nigeria’s total public debt could rise from N160.6 trillion to N200 trillion by the end of 2025. This would represent a significant increase in the country’s debt-to-GDP ratio, raising concerns about its ability to service its debts. The Federal Government’s plan to borrow an additional N9.3 trillion or more in the second half of the year to cover its widening fiscal deficit will only exacerbate the problem. Many critics have questioned this new borrowing arrangement at a time when the government claimed that it has met the threshold of its projected internally generated revenue in less than 10 months in the fiscal year.
To address the debt crisis, the government must understand that it cannot borrow itself into prosperity nor can it tax itself into prosperity, and therefore must prioritise fiscal prudence and implement sustainable spending habits. This requires a fundamental shift in the government’s approach to budgeting and expenditure management. The government must reduce unnecessary expenditures, increase revenue generation through diversification and tax reforms, and prioritize infrastructure development and social welfare programmes that cater to all and not just to a privileged few. By adopting these bold measures, Nigeria can mitigate its debt crisis and achieve sustainable economic growth.
The private sector also has a crucial role to play in driving economic growth. The government must create an enabling environment that encourages private sector investment and innovation. This can be achieved through policies that promote ease of doing business, tax incentives, and investment in human capital. As the government can only tax the living and not the dead or the dysfunctional living. There is no questioning the fact that the government has a responsibility to make Nigeria business-friendly. A situation where big manufacturing companies are leaving Nigeria in droves and SMEs are shutting down is not healthy for the economy. The multiplier effect and social upheaval it is throwing up cannot be easily quantified.
The National Assembly may do well in its exercise of its oversight function to put a legal cap on borrowing and priotising naira denominated debt, as well as ensuring that the loan terms are properly negotiated on favourable terms
In conclusion, Nigeria’s worsening debt crisis is a call to action for the government to adopt fiscal prudence and implement sustainable economic policies. The government’s spending habits must be reined in, and revenue generation must be increased while the government focuses its efforts on the diversification of the economy, human capital investment such as health care , education, skills development and enhanced productivity. The CBN must continue to focus on monetary tightening to combat inflation, and the private sector must be encouraged to drive economic growth. Nations which survived economic challenges did so working together not by tearing each other down and pulling energy in different directions. They worked with one mind putting the country first and prioritising the people.
By working together, Nigeria can overcome its economic challenges and achieve sustainable growth and development.
The road ahead will not be easy, but with the right policies and a commitment to fiscal discipline, Nigeria can navigate its economic challenges and emerge stronger. The government must take bold steps to address the country’s fiscal vulnerabilities and ensure a brighter economic future for its citizens. Only through concerted efforts and effective policy measures can Nigeria achieve sustainable economic growth and reduce its debt burden.
