Nigeria spent over $2.01 billion on external debt servicing between January and April 2025, marking a 50% jump compared to the same period in 2024.
The Central Bank of Nigeria’s (CBN) international payments data on its website shows that debt service costs now account for more than three-quarters of the country’s total foreign outflows.
This development highlights the mounting pressure Nigeria faces in managing its external obligations amid persistent foreign exchange challenges and a fragile revenue base.
Debt service dominates FX outflows
- According to the CBN report, total international payments, including debt servicing, remittances, and letters of credit, stood at $2.60 billion in the first four months of 2025.
- Out of this, debt service alone accounted for $2.01 billion, or 77.1% of total payments. By contrast, in the same period last year, debt service costs were $1.33 billion, about 64.5% of the total $2.07 billion FX outflows.
- This growing share of debt payments suggests that Nigeria is spending more of its FX reserves, which depleted by about $3 billion within the four-month period, settling past loans.
March, April see sharp spikes
- A deeper look at the month-on-month data paints a worrying picture. In January 2025, debt servicing stood at $540.67 million, slightly below the $560.52 million recorded in January 2024. February also maintained some stability, with payments totalling $276.73 million, just shy of the $283.22 million figure from the previous year.
- But from March, the curve steepened. Nigeria paid $632.36 million in debt service that month, more than double the $276.17 million paid in March 2024. The trend continued in April with another $557.79 million disbursed, up a massive 159% from the $215.20 million recorded in April 2024.
- In just two months, March and April, Nigeria paid nearly $1.2 billion, suggesting the presence of large loan repayments.
What you should know
The rising cost of debt service is crowding out other critical FX demands. With over 77 cents out of every dollar Nigeria spends abroad now going to service debt, there is limited fiscal space for productive external investments or even basic trade transactions.
This trend also raises questions about the structure of Nigeria’s external debt. The back-loaded nature of some loans and increasing reliance on foreign borrowing may be pushing up near-term repayment obligations.
Nairametrics earlier reported that the International Monetary Fund (IMF) confirmed that Nigeria fully repaid the $3.4 billion financial support it received under the Rapid Financing Instrument (RFI) to cushion the economic impacts of the COVID-19 pandemic.
“As of April 30, 2025, Nigeria has fully repaid the financial support of about US$3.4 billion it requested and received in April 2020 from the International Monetary Fund (IMF) under the Rapid Financing Instrument to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices,” the IMF stated.
The Fund noted that despite the full settlement of the principal, Nigeria will continue to honour additional annual payments related to Special Drawing Rights (SDR) charges.
It clarified that Nigeria would continue to make annual payments of approximately $30 million in SDR-related charges over the next few years. These charges stem from the difference between Nigeria’s SDR holdings and its cumulative SDR allocation.
Earlier reports showed that debt servicing to the IMF surged to $1.63 billion in 2024, made up entirely of principal repayments, with no interest or charges recorded for that year. In total, Nigeria’s external debt servicing for 2024 amounted to $4.66 billion, an increase from $3.5 billion in 2023.
Multilateral creditors accounted for the bulk of the external debt servicing at $2.62 billion or 56%, with the IMF alone responsible for about 35% of the total external debt payments in 2024.
