Nigeria is preparing to meet two major debt obligations before the end of 2025, comprising the $1.12 billion Eurobond and a N100 billion Sukuk bond, both of which represent crucial markers in the country’s debt management trajectory.
The 7.625% Eurobond, issued in November 2018 and maturing on 21 November 2025, is a core component of Nigeria’s external borrowing programme, designed to fund infrastructure and bolster foreign reserves.
The bond enjoyed strong investor participation at issuance despite global uncertainty at the time.
Similarly, the 15.743% FGN Sukuk bond, maturing on 28 December 2025, was floated through FGN Roads Sukuk Company 1 Plc to fund key national road projects.
Valued at N100 billion (about $68.5 million), the Sukuk highlights the Federal Government’s attempt to diversify funding sources and deepen Islamic finance.
When converted to local currency at the exchange rate of N1,465/$, these two maturities amount to over N1.7 trillion, posing a significant test to Nigeria’s fiscal resilience amid growing debt service pressures.
Data from the Debt Management Office (DMO) show that debt servicing exceeded N5 trillion in the first half of 2025 alone. Analysts have therefore raised questions about whether the government will resort to refinancing, fresh borrowings, or alternative repayment strategies to navigate the coming wave of maturities.
IMF, Eurobonds dominate Nigeria’s debt servicing outflows
Nigeria spent over $2.32 billion (about N3.4 trillion) on external debt servicing between January and June 2025, highlighting the scale of the country’s fiscal strain and exposure to foreign creditors. According to DMO data, the International Monetary Fund (IMF) and Eurobond holders jointly accounted for nearly 65% of total external repayments, absorbing $1.5 billion (N2.197 trillion) in six months.
The IMF was the single largest recipient, with $816.3 million (N1.195 trillion) — representing 35.2% of Nigeria’s external debt service bill. The figure underscores Nigeria’s dependency on IMF credit facilities, which typically carry stringent repayment obligations. Eurobond obligations followed closely, consuming $687.8 million (N1.007 trillion) or 29.6%, reflecting the heavy costs of Nigeria’s commercial market borrowings.
By contrast, concessional lenders such as the World Bank’s International Development Association (IDA) and the African Development Bank (AfDB) received $346.8 million (N508.1 billion) and $116.9 million (N171.3 billion) respectively. Combined, these development institutions accounted for about $463 million (N678.3 billion) or 20% of total external repayments, providing a relatively cheaper financing option compared to high-yield Eurobonds.
Meanwhile, repayments to China’s EXIM Bank and China Development Bank totaled $235.6 million (N345.15 billion), representing less than 11% of total external servicing. This marks a sharp decline from previous years when Chinese loans dominated Nigeria’s infrastructure financing. Analysts attribute this decline to maturing legacy loans and a strategic shift in Nigeria’s borrowing mix away from bilateral exposures toward multilateral and market-based sources.
Despite this moderation, Chinese funding remains significant in transport and energy infrastructure. However, experts caution that a prolonged slowdown in Chinese credit could stall ongoing projects, forcing Nigeria to rely more heavily on expensive IMF and Eurobond debt to fill financing gaps.
Domestic borrowing burden deepens
On the domestic front, debt servicing pressures continue to mount. Between April and June 2025, the Federal Government spent an estimated N1.7 trillion on local debt repayments, according to DMO data. Of this, FGN Bonds consumed N1.07 trillion, roughly two-thirds of the total, while Treasury Bills accounted for N537.9 billion (31%).
Other instruments, such as Sukuk, Promissory Notes, Green Bonds, and Savings Bonds, collectively absorbed less than N95 billion, showing limited diversification impact within the domestic debt structure.
In total, Nigeria’s combined domestic and external debt servicing hit N5.7 trillion in the first half of 2025 — equivalent to nearly half of the country’s projected revenue for the year.
Analysts warn that the growing share of interest payments and the dominance of short-term borrowings expose Nigeria to refinancing and rollover risks. Rising yields, a volatile exchange rate, and sluggish revenue mobilisation have further tightened fiscal space, constraining funding for infrastructure, education, and healthcare.
Analysts urge balanced debt strategy and revenue expansion
Reacting to the development, Chief Executive Officer of Chatterhouse Limited, Akin Olaniyan, urged the government to pursue a balanced short- and long-term debt management approach, warning that Nigeria has “little room to manoeuvre” as debt service already consumes a disproportionate share of national income.
He compared Nigeria’s fiscal situation to “an individual using 70–90% of his income to service loans,” stressing the urgent need to expand non-oil revenues and privatize underperforming public assets.
Olaniyan advised that any new borrowing should be strictly tied to productive investments capable of generating returns, while debt restructuring or renegotiation could offer temporary relief. He cautioned that deploying foreign reserves to service debts should be a last resort and called for fiscal transparency and credible leadership to rebuild public and investor trust.
Similarly, investment banker Mr Tajudeen Olayinka advised the Federal Government to strengthen policy coordination and monetary transmission mechanisms to manage debt pressures effectively. According to him, while local-currency debts are manageable, foreign obligations pose a greater risk unless export earnings improve. He observed that Nigeria’s foreign reserves have recently increased, partly from past Eurobond and diaspora bond inflows, providing a temporary cushion for external repayments.
Olayinka identified weak monetary policy transmission as a core challenge, arguing that if Central Bank policies were functioning effectively, “interest rates and inflation should by now be approaching single digits.” He explained that this inefficiency likely motivated the Central Bank of Nigeria’s recent move to assume greater control over the fixed-income market, aiming to enhance policy effectiveness and liquidity management.
Both analysts agree that Nigeria’s path to debt sustainability lies in revenue diversification, disciplined borrowing, stronger policy transmission, and private capital mobilisation. Without these, the country risks deepening fiscal fragility despite its growing debt service capacity.
