Nigeria’s outstanding promissory notes decreased by 15.6% quarter-on-quarter from December 2024 to March 2025, falling from N1.542 trillion to N1.301 trillion, according to data from the Debt Management Office (DMO). This decline reflects the federal government’s recent efforts to settle verified payment obligations and restore confidence among stakeholders in the economy.
On a year-on-year basis, the reduction was even more significant, with promissory notes falling 17.1% from March 2024 to March 2025.
What Are Promissory Notes?
A promissory note is a written promise by one party to pay a specific sum to another party at a fixed or determinable future date or on demand under agreed terms.
Government’s Payment Initiative
Last week, the Federal Government announced plans to clear outstanding payments to contractors for duly verified and completed projects across various Ministries, Departments, and Agencies (MDAs). The Office of the Accountant General of the Federation (OAGF) emphasized its commitment to ensuring value for money and timely payments.
Challenges in Debt Redemption and Rising Debt Profile
Despite recent progress, the government has faced challenges redeeming maturing promissory notes and other debt obligations. Earlier in 2025, reports highlighted the Central Bank of Nigeria’s refusal of overdraft requests, raising concerns about potential defaults on some due payments if alternative funding sources are not secured.
Director-General of the DMO Patience Oniha, pointed to the increase in Nigeria’s debt profile being driven by both new borrowings and the continued issuance of promissory notes without adequate revenue backing. She noted:
“The government has been issuing promissory notes to settle obligations for which it doesn’t really have the revenue. So, that is why the debt stock has been growing.”
Domestic Debt Approaches N79 Trillion
Nigeria’s domestic debt stood at N78.76 trillion by March 31, 2025, a 20% year-on-year increase from N65.65 trillion a year earlier. On a quarterly basis, domestic debt rose by 5.9%, up by N4.38 trillion from December 2024.
Breakdown includes:
- FGN Bonds: Increased from N55.4 trillion to N59.8 trillion
- Treasury Bills: Rose from N12.4 trillion to N12.7 trillion
- FGN Savings Bonds: Grew from N72.9 billion to N82.7 billion
- FGN Sukuk and Green Bonds: Remained steady at N992.6 billion and N15 billion respectively.
External Debt Rises Sharply to N70.63 Trillion
Nigeria’s external debt climbed to N70.63 trillion as of March 31, 2025, up 26.1% year-on-year from N56.02 trillion in March 2024. The quarter-on-quarter increase was modest, rising by just 0.5% from N70.29 trillion in December 2024.
External debt includes borrowings from multilateral bodies like the World Bank and African Development Bank, bilateral lenders, and commercial creditors such as Eurobond investors.
Currency Depreciation Adds Pressure on Debt Servicing
The rising debt servicing burden, when measured in naira, has become heavier due to the continued depreciation of the local currency. Without effective reforms to stabilize the naira, this trend could worsen, further straining government finances.
