State governments spent a combined N455.38 billion servicing foreign loans in 2025, marking a sharp rise from N362.08 billion recorded in 2024, according to Federation Accounts Allocation Committee data published by the National Bureau of Statistics.
The N93.30 billion increase represents a 25.77 percent year-on-year surge, underscoring that external debt obligations are taking a larger share of statutory allocations.
Under the FAAC framework, foreign debt service is treated as a first-line charge, meaning deductions are made before net funds are shared with states.
The News Chronicle gathered that this structure is steadily shrinking the fiscal breathing room available for salaries, infrastructure, and other capital commitments, particularly for states with high foreign exposure.
Monthly figures show that repayments began in January at N40.09 billion, then declined slightly in February. Deductions remained steady at N39.10 billion from March to July, indicating ongoing obligations.
Payments were subsequently lowered from August through December to N36.14 billion, indicating a revised repayment band.
At N92.80 billion, Lagos carried the heaviest load—more than 20% of the countrywide total. Significant gains were recorded in Rivers, Kaduna, and Ogun, with some states exceeding their 2024 results by more than twice.
Regionally, the South West had the highest debt service, N162.77 billion, followed by the South South and North West.
The figures underscore rising financial pressure, as distributable income is subordinated to foreign loan repayments.
