In a sweeping display of fiscal transformation, the Federal Government and 33 states, including the Federal Capital Territory, have collectively repaid ₦1.85 trillion in domestic loans between June 2023 and December 2024, following far-reaching economic reforms introduced by President Bola Ahmed Tinubu.
According to the Debt Management Office (DMO), as reported by THE EXPLAINER, this marks a dramatic reduction in Nigeria’s subnational debt, which dropped from ₦5.82 trillion in June 2023 to ₦3.97 trillion by the end of 2024.
Analysts attribute the surge in repayments to increased revenue from the removal of fuel subsidies and the liberalisation of the foreign exchange market, both of which have expanded fiscal space for governments to meet debt obligations.
Delta State led the pack by slashing its debt by more than half, from ₦465.4 billion to ₦199.58 billion, while Lagos, Imo, Cross River, Ogun, Akwa Ibom, and Oyo States also made significant repayments, each clearing over ₦60 billion.
Jigawa State posted the most dramatic percentage reduction, cutting 96% of its debt, from ₦43.13 billion to just ₦1.33 billion, while Ondo repaid ₦61.6 billion out of a ₦74 billion debt.
However, three states, Rivers, Enugu, and Niger, saw their domestic debts rise, with Rivers recording an increase of ₦138.89 billion, raising concern over fiscal discipline.
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At the federal level, the Tinubu administration repaid $7 billion in external debt, including a complete clearance of IMF obligations, which fell from $3.26 billion in June 2023 to zero by Q2 2025.
The government also stopped borrowing via “Ways and Means” from the Central Bank of Nigeria and returned to open market financing to bridge budget deficits.
It successfully redeemed the first Sukuk bond issued in 2018 and spent ₦5.87 trillion in 2024 alone on domestic debt servicing, more than double the ₦2.4 trillion spent in 2022.
Fiscal analysts view this as a major policy shift toward sustainable public finance, with the government narrowing the budget deficit and reducing reliance on debt to fund routine expenditure.
Federation Account Allocation Committee (FAAC) disbursements to states and local governments rose to ₦9.58 trillion in 2024, a 28.6% increase from 2022 levels, enabling states to fund their budgets independently.
With the minimum wage increasing from ₦30,000 to ₦70,000, states have managed to meet obligations without requesting federal bailouts or facing industrial action, unlike previous administrations.
“These reforms have given a new lease of life to the finances of both federal and state governments,” said Finance Minister Wale Edun.
Minister of Budget and Economic Planning, Atiku Bagudu, added, “These are not just bold decisions, but foundational moves toward long-term financial resilience.”
The unprecedented repayments are being hailed as a departure from the bailout culture that characterised past administrations and a sign of improved revenue discipline.
Citizens across the country have reportedly begun to experience improvements in infrastructure and public services due to better funding and prioritisation.
Although some states still struggle with high debt, the coordinated repayment efforts reflect renewed fiscal responsibility and public sector reform.
The Federal Government’s actions are also likely to boost Nigeria’s profile with international lenders such as the IMF and World Bank.
Experts say if maintained, this trajectory could lead to long-term improvements in Nigeria’s economic credibility, investor confidence, and macroeconomic stability.
The Explainer
