Ways and Means debt falls N613bn as Nigeria’s total public debt

The Federal Government has begun reducing its N22.7 trillion securitised Ways and Means debt, with the balance falling by N613.34 billion in the second quarter of 2026 as repayment of the principal commenced after a three-year moratorium.

The Debt Management Office (DMO) said the outstanding balance declined to N22.106 trillion at June 30 from N22.719 trillion at the end of March, representing a 2.7 per cent reduction. The decline is the first since the liability was securitised and added to Nigeria’s public debt stock in June 2023.

The reduction coincided with the expiration of the three-year moratorium attached to the 40-year restructuring of the Ways and Means advances. Under the arrangement, the principal is to be repaid over the remaining 37 years, while the debt carries a nine per cent annual interest rate.

But the repayment provides only limited relief against Nigeria’s broader debt expansion.

The DMO’s latest figures show that total public debt increased to N166.79 trillion at the end of June from N159.35 trillion three months earlier, meaning the country’s overall debt stock rose by about N7.44 trillion in a single quarter.

Domestic debt accounted for N91.59 trillion, or 54.91 per cent of the total, making borrowing within Nigeria the main source of the government’s debt accumulation.

The contrast is important. While the government has started paying down one major legacy liability, it continues to contract new debt to finance fiscal requirements, meaning the reduction in Ways and Means has yet to translate into an overall fall in public indebtedness.

The securitised Ways and Means balance itself remains substantial. At N22.106 trillion, it accounts for about 25.4 per cent of the Federal Government’s domestic debt and roughly a third of its FGN bond portfolio.

The debt originated from repeated short-term advances provided by the Central Bank of Nigeria to bridge government revenue shortfalls. The N22.719 trillion balance was converted into long-term securities in 2023 following approvals by the Federal Executive Council and National Assembly.

The securitisation reduced the immediate cost and extended the repayment period, but also turned what had previously been a central-bank financing obligation into a formal component of government debt.

The latest repayment is therefore significant because it signals a shift from restructuring the liability to actually reducing the principal outstanding.

For the Federal Government, however, the broader fiscal challenge remains. The rise in total debt means that new borrowing is currently outweighing the reduction in the Ways and Means balance, while higher domestic borrowing also increases the government’s exposure to interest costs in the local debt market.

The development could also have consequences for private-sector financing because government securities compete with businesses for domestic savings and bank liquidity.

The latest numbers therefore present a mixed fiscal picture: Nigeria has begun retiring one of its most controversial legacy debts, but the N613 billion reduction is small relative to the N7.44 trillion quarterly increase in total public debt.

The real test for debt sustainability will be whether the government can maintain the repayment of legacy obligations while reducing its dependence on new borrowing and strengthening revenue enough to finance public spending without continually adding to the debt burden.