Nigeria’s gross foreign exchange (FX) reserves fell by $2.57 billion from January to March 2025, marking a 6.29% decrease over the three-month period.
This is according to external reserves data available on the website of the Central Bank of Nigeria (CBN).
In a statement earlier this week, the apex bank attributed the decline in the country’s foreign exchange reserves during the first quarter of 2025 to the burden of foreign debt servicing.
What does the data say
On January 2, 2025, Nigeria’s foreign exchange reserves stood at approximately $40.88 billion and dropped to $39.72 billion by the end of the month.
The reserves further dropped to $38.42 billion by the end of February. This represents a decline of $1.3 billion within the span of one month, equivalent to a 3.27% decrease.
The downward trend continued into March, as reserves fell further to $38.31 billion at the end of March. This represents an additional reduction of $110 million, translating to a 0.29% decline compared to the previous month.
The combined effect of these month-on-month decreases led to a total quarterly drop of $2.57 billion, representing a cumulative decline of 6.29% over the first quarter of 2025.
Debt service payments and pressure on reserves
Despite the strong reserves position at the end of 2024, the first quarter of 2025 witnessed a reversal in fortune, primarily driven by the need to service foreign-denominated debts.
The CBN noted that the first quarter figures reflected seasonal and transitional adjustments, including significant interest payments on foreign debt. These obligations have been a consistent pressure point, leading to a drawdown of reserves despite the underlying improvements observed in the preceding quarter.
The CBN statement read, “Reserves have continued to strengthen in 2025. While the first quarter figures reflected some seasonal and transitional adjustments, including significant interest payments on foreign-denominated debt, underlying fundamentals remain intact, and reserves are expected to continue improving over the second quarter of this year.”
Available data from the CBN revealed that Nigeria’s total debt service payments amounted to $540 million in January 2025 and $276 million in February 2025.
This means that a total of $816 million was spent on foreign debt servicing in the first two months of 2025.
The significant outflow in January was attributed to scheduled foreign debt repayments, which created substantial pressure on the reserves.
The subsequent reduction in February’s debt servicing to $276 million provided some respite, but the overall trend of high debt obligations continued to weigh on the reserve levels.
CBN expects uptick in reserves level this year
Despite the decline in Q1, the CBN remains optimistic about a rebound in reserve levels as oil production improves and non-oil FX earnings are expected to rise.
The statement noted, “Going forward, the CBN anticipates a steady uptick in reserves, underpinned by improved oil production levels, and a more supportive export growth environment expected to boost non-oil FX earnings and diversify external inflows.”
The apex bank has emphasized its commitment to prudent reserve management, transparent reporting, and macroeconomic policies aimed at stabilizing the naira, attracting investment, and building long-term economic resilience.
