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Nigeria expended $2.86 billion on external debt servicing between January and August 2025, representing 69.1% of total foreign payments of $4.14 billion, according to the latest international payments data released by the Central Bank of Nigeria (CBN).
Although the figure was lower than the $3.06 billion spent in the same period of 2024, when debt servicing accounted for 70.7% of total outflows, the proportion of foreign payments directed toward debt obligations remains persistently high — with nearly seven in every ten dollars leaving the country used to service debt.
Volatile Repayment Trends
The CBN data highlighted fluctuations in Nigeria’s repayment schedule.
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January 2025: $540.67m (vs. $560.52m in Jan. 2024)
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February: $276.73m (slightly below $283.22m in 2024)
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March: $632.36m (surging 129% from $276.17m in 2024)
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April: $557.79m (up 159% from $215.20m in 2024)
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May: $230.92m (down sharply from $854.37m in 2024)
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June: $143.39m (vs. $50.82m in 2024)
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July: $179.95m (a 67% drop from $542.5m in 2024)
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August: $302.3m (8% higher than $279.95m in 2024)
This volatility underscores Nigeria’s uneven debt servicing commitments, with monthly obligations swinging between sharp spikes and steep declines.
Debt Burden Still Dominant
Despite the marginal reduction in overall debt servicing compared to 2024, debt continues to dominate Nigeria’s external obligations. Analysts warn that such a high ratio constrains fiscal flexibility, diverting foreign exchange away from imports, investment, and growth-enhancing expenditure.
Fitch Outlook: Rising Pressures Ahead
Global ratings agency Fitch projects Nigeria’s external debt service bill to rise further, from $4.7bn in 2024 to $5.2bn in 2025, driven by $4.5bn in amortisation payments and a $1.1bn Eurobond repayment due in November 2025. Payments are expected to decline to $3.5bn in 2026.
Fitch also flagged persistent challenges in fiscal management, citing a minor delay in a Eurobond coupon payment in March 2025. While the country’s external debt levels remain “moderate,” Fitch warned that high interest costs, weak revenue performance, and limited fiscal space pose significant risks.
General government debt is expected to remain at about 51% of GDP in 2025 and 2026. However, the agency cautioned that Nigeria’s structurally low revenue base — projected at just 13.3% of GDP — leaves the government with a high interest-to-revenue ratio, estimated at over 30% at the general government level and nearly 50% for the Federal Government.
Policy Implications
The dominance of debt servicing in Nigeria’s external payments profile highlights the urgency of strengthening fiscal revenues, improving public finance management, and creating buffers to absorb rising external obligations. Without structural reforms, analysts warn, Nigeria’s external vulnerability will remain elevated.
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