Nigeria spent $817.4 million (N1.26 trillion) on debt servicing between January and February 2025, according to new figures released by the Central Bank of Nigeria (CBN).
The payments, which cover external obligations, revealed the growing burden of debt repayment on the nation’s finances, despite a slight decline compared to the same period last year.
The latest data indicates that debt servicing costs in the first two months of 2025 fell by 3.12% from $843.6 million recorded in the same period of 2024.
However, concerns persist over the impact of rising debt on Nigeria’s fiscal stability, particularly as the country allocates a significant portion of its 2025 budget to loan repayments.
Breakdown of Debt Payments
The January-February 2025 debt servicing expenses were largely directed toward settling interest and principal repayments on external loans, including obligations to multilateral lenders, bilateral creditors, and Eurobond holders. The CBN data showed that:
- January 2025 saw $403.86 million spent on debt servicing.
- February 2025 recorded $413.57 million in payments, reflecting a marginal increase from the previous month.
With the government committing N16.3 trillion to debt servicing in the 2025 budget, the latest figures reinforce concerns over the sustainability of Nigeria’s debt profile and the pressure it places on other critical expenditures.
Rising Debt Amid Revenue Challenges
Nigeria’s total public debt stock has continued to grow, driven by fresh borrowing to finance infrastructure projects, budget deficits and forex interventions.
The Debt Management Office (DMO) recently disclosed that Nigeria’s total debt stood at N97.3 trillion ($108 billion) as of December 2024, a significant increase from the previous year.
Despite efforts to enhance revenue through tax reforms and improved oil production, Nigeria’s debt servicing obligations remain a major constraint on economic growth and development spending.
Analysts warn that the country’s rising debt-service-to-revenue ratio could further strain government finances, limiting investments in infrastructure, education and healthcare.
Pressure on Foreign Reserves and Currency Stability
The CBN’s intervention in debt payments continues to exert pressure on Nigeria’s foreign reserves, which stood at $32.1 billion as of March 2025.
The central bank has also struggled to maintain exchange rate stability, with the naira experiencing volatility against the dollar.
The slowdown in the use of Letters of Credit (LCs) for trade payments also reflects dollar liquidity challenges, which have made it difficult for businesses to access foreign exchange.
As Nigeria seeks to stabilize its currency and improve investor confidence, analysts emphasize the need for fiscal discipline and effective debt management strategies.
Path Forward: Reducing Nigeria’s Debt Burden
To ease the debt burden, financial experts have called on the government to prioritize domestic revenue mobilization, implement cost-cutting measures, and reduce reliance on external borrowing.
The 2025 fiscal strategy aims to boost non-oil revenue, expand the tax base, and enhance efficiency in public spending.
However, with global interest rates still relatively high, Nigeria may face difficulties refinancing its debt at favorable terms.
The success of ongoing economic reforms will be crucial in determining the country’s ability to manage its debt portfolio while sustaining growth and development.
As the government navigates these challenges, all eyes remain on its ability to balance debt obligations with pressing economic priorities, ensuring long-term fiscal stability for Africa’s largest economy.
