Between January and August 2025, Nigeria allocated $2.86 billion towards servicing its external debt, as reported by the Central Bank of Nigeria (CBN) through international payment statistics released on Wednesday. This amount accounts for 69.1% of the nation’s total foreign payments, which stood at $4.14 billion during the same timeframe.
When compared to the corresponding period in 2024, Nigeria’s debt servicing expenditure was $3.06 billion, representing 70.7% of the $4.33 billion total foreign payments. Although the 2025 figure is $198 million less than that of the previous year, debt servicing continues to consume a significant portion of Nigeria’s foreign currency outflows, with nearly seven out of every ten dollars paid abroad directed to creditors rather than trade or capital investments.
Fluctuating Monthly Debt Payments
The CBN data highlights considerable variability in Nigeria’s monthly external debt repayments throughout 2025:
- January 2025: $540.67 million, slightly below January 2024’s $560.52 million.
- February 2025: $276.73 million, a marginal decrease from $283.22 million in February 2024.
- March 2025: $632.36 million, more than doubling the $276.17 million paid in March 2024.
- April 2025: $557.79 million, significantly higher than April 2024’s $215.20 million.
- May 2025: $230.92 million, a steep decline from $854.37 million in May 2024.
- June 2025: $143.39 million, nearly three times the $50.82 million recorded in June 2024.
- July 2025: $179.95 million, down from $542.5 million in July 2024.
- August 2025: $302.3 million, slightly exceeding the $279.95 million paid in August 2024.
This data illustrates a volatile pattern in monthly debt servicing, with payments dropping from $540.67 million in January to $276.73 million in February, then surging to $632.36 million in March, followed by further fluctuations through the subsequent months.
Implications of Debt Servicing on Nigeria’s Economy
The substantial share of foreign payments dedicated to debt servicing underscores Nigeria’s fiscal fragility. Despite a reduction in absolute debt service payments compared to 2024, these obligations remain the predominant drain on foreign exchange reserves, limiting the country’s capacity to finance essential imports and investments.
Experts highlight that this trend reflects deep-rooted structural challenges in revenue generation and a heavy reliance on external borrowing to meet fiscal demands.
Outlook and Expert Analysis
Fitch Ratings, a global credit rating agency, forecasts an increase in Nigeria’s external debt service from $4.7 billion in 2024 to $5.2 billion in 2025. This projection includes $4.5 billion in principal repayments and a notable $1.1 billion Eurobond maturity scheduled for November 2025. The agency anticipates a reduction in debt service obligations to $3.5 billion by 2026.
Fitch also pointed to a delayed Eurobond coupon payment in March 2025 as indicative of ongoing challenges in managing public finances. While Nigeria’s debt servicing levels remain moderate on a global scale, the agency warns that weak revenue collection and elevated interest expenses pose significant risks to fiscal stability.
The forecast suggests that general government debt will hover around 51% of GDP during 2025-2026, with government revenues expected to average only 13.3% of GDP. Interest payments are projected to consume over 30% of total government revenue, and for the Federal Government alone, this ratio could approach 50%.