Nigerian states spent ₦235.58 billion on external debt servicing in the first half of 2025—a sharp 68.4% increase from the ₦139.92 billion paid during the same period in 2024, according to National Bureau of Statistics data from FAAC disbursements.
The spike highlights the growing strain of dollar-denominated loan repayments, worsened by the continued depreciation of the naira.
Debt servicing for states is handled by the Federal Government through the Irrevocable Standing Payment Order (ISPO) system, which allows for automatic deductions from monthly FAAC allocations.
Once an external loan is approved and agreements are signed, the Office of the Accountant-General, in collaboration with the Federal Ministry of Finance and the Central Bank, deducts the repayment amount before distributing funds to the affected states.
