The Central Bank of Nigeria (CBN) has raised an estimated ₦15.3 trillion from Treasury Bills in 2025 as part of broader efforts to bridge the Federal Government’s widening budget deficit, according to official financial data and market analysts. The scale of domestic borrowing marks one of the most aggressive Treasury Bill issuances in recent years, reflecting mounting fiscal pressures amid ongoing economic reforms.
Treasury Bills, short-term government debt instruments, have increasingly become a preferred financing option as Nigeria navigates reduced oil revenues, rising debt service obligations, and limited access to cheap foreign borrowing. Analysts say the surge in issuance highlights the government’s reliance on domestic markets to fund expenditure while avoiding excessive exposure to external debt.
Market data indicates that the CBN conducted frequent and large-volume auctions throughout the year, attracting strong demand from banks, pension fund administrators, asset managers, and foreign portfolio investors. Stop rates remained elevated, reflecting tight monetary conditions and the CBN’s continued commitment to inflation control.
Financial experts say the aggressive borrowing strategy is closely linked to the Federal Government’s 2025 budget framework, which projects a significant deficit driven by infrastructure spending, social interventions, and debt servicing. With oil output still below optimal levels and non-oil revenue mobilisation under pressure, Treasury Bills have become a critical stopgap.
A senior economist explained that while the borrowing helps sustain government operations, it comes with trade-offs. “The upside is that the government is meeting its obligations without excessive foreign exposure. The downside is the crowding-out effect on the private sector, as high yields attract capital away from productive investments.”
Commercial banks have been among the biggest participants in the auctions, drawn by attractive yields and the low-risk nature of government securities. Pension funds, constrained by regulatory requirements, have also increased their exposure, further deepening government reliance on institutional investors.
The CBN has defended the strategy, noting that Treasury Bills also serve as a key monetary policy tool. By adjusting rates and volumes, the apex bank manages liquidity in the financial system, curbing excess money supply that could fuel inflation.
However, some analysts warn that sustained heavy borrowing could complicate the government’s debt sustainability profile. Although Treasury Bills are short-term instruments, rollover risks remain significant, especially if market conditions tighten or investor sentiment weakens.
The Debt Management Office (DMO) has acknowledged the challenges but insists that Nigeria’s debt remains within manageable thresholds when measured against GDP. Officials argue that ongoing fiscal reforms, including tax expansion and subsidy rationalisation, will gradually reduce dependence on short-term borrowing.
Meanwhile, investors continue to view Nigerian Treasury Bills as attractive, particularly in a global environment of easing inflation and shifting interest rate expectations. Foreign portfolio inflows have shown modest recovery, contributing to improved foreign exchange liquidity.
As the government balances fiscal realities with economic reform goals, analysts say the key test will be whether borrowed funds translate into tangible growth outcomes. Without corresponding revenue expansion and expenditure efficiency, concerns over fiscal sustainability are likely to persist.
