Nigeria debt service reached $2.86bn in 2025, taking 69% of total foreign payments, showing persistent pressure on external reserves

Nigeria debt service consumed a staggering $2.86 billion in the first eight months of 2025, accounting for over two-thirds of the country’s total foreign payments, new data from the Central Bank of Nigeria (CBN) reveals.

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Between January and August 2025, the country’s total foreign obligations stood at $4.14 billion, with debt repayments alone taking up 69.1 per cent.

Although this represents a slight dip from the same period in 2024 — where $3.06 billion was spent on debt, making up 70.7 per cent of $4.33 billion in total payments — the dominance of debt service remains largely unchanged.

This persistent outflow towards external creditors underlines Nigeria’s ongoing vulnerability in the global financial landscape.

Despite trimming total debt service by nearly $200 million compared to 2024, the ratio of debt to total foreign payments still signals structural fiscal stress.

Monthly figures paint a volatile picture. March 2025 saw a dramatic spike to $632.36 million — more than doubling the previous year’s figure for the same month.

April followed with $557.79 million, up 159 per cent from April 2024. May, by contrast, plunged to $230.92 million, a sharp fall from $854.37 million the year before.

Fitch Ratings recently flagged Nigeria’s rising external debt service burden, projecting a jump from $4.7 billion in 2024 to $5.2 billion in 2025, including a critical $1.1 billion Eurobond repayment scheduled for November.

The agency also reported a minor delay in March’s Eurobond coupon payment, citing this as indicative of broader fiscal pressures.

While Nigeria debt service levels remain technically manageable, Fitch warned of growing risks due to weak government revenues, high interest costs, and limited fiscal flexibility.

The agency forecasts the general government debt-to-GDP ratio will hover around 51 per cent through 2025 and 2026, but with an interest-to-revenue ratio exceeding 30 per cent — and approaching 50 per cent for the Federal Government alone.

Ultimately, the data underscores a key economic challenge: nearly three out of every four dollars Nigeria spends abroad go toward debt repayment, rather than imports, infrastructure, or investment.

Also read: Nigeria retains position as third-largest debtor to World Bank, owes $18.2bn

With external debt service expected to remain elevated, pressure on foreign reserves and currency stability may persist well into 2026.

David Okere

David Okere is a journalist and contributor to Freelanews.com, covering business, governance, public affairs, and human-interest stories with a commitment to accuracy, balance, and public interest reporting.