Nigeria’s external debt servicing has surged dramatically in the first four months of 2025, with the country spending approximately $2.01 billion on external debt repayments between January and April. This marks a 50 percent increase compared to the $1.33 billion spent during the same period last year, according to the latest international payments data published by the Central Bank of Nigeria (CBN).
The sharp rise in debt servicing highlights the growing burden of Nigeria’s external obligations on its foreign exchange reserves, which reportedly depleted by about $3 billion over the same period. Debt servicing now accounts for over 77 percent of Nigeria’s total international payments — a significant jump from 64.5 percent in the first four months of 2024.
Nigeria’s total international payments, which include debt servicing, remittances, and letters of credit, rose to $2.6 billion as of April 2025, compared to $2.07 billion in the corresponding period of the previous year. Monthly data reveal varying payment patterns: January 2025 saw a payment of $540.67 million, slightly lower than January 2024’s $560.52 million. February’s payments remained steady at $276.73 million compared to $283.22 million in 2024.
However, debt servicing spiked significantly in March and April 2025. March recorded a staggering $632.36 million, more than doubling the $276.17 million paid in March 2024. April continued this trend with $557.79 million disbursed, marking a 159 percent increase over April 2024’s $215.20 million. Together, these two months accounted for nearly $1.2 billion in debt repayments alone.
A notable portion of the debt payments during this period corresponds to the repayment of a $3.4 billion loan from the International Monetary Fund (IMF). This loan, provided under the Rapid Financing Instrument in April 2020, was aimed at cushioning Nigeria’s economy from the devastating effects of the COVID-19 pandemic and the sharp drop in oil prices.
The IMF confirmed Nigeria completed the full repayment on April 30, 2025. Despite settling the principal, Nigeria is expected to continue making annual payments related to Special Drawing Rights (SDR) charges, estimated at around $30 million per year for the coming years. These charges arise due to the difference between Nigeria’s current SDR holdings and its total cumulative SDR allocation.
External debt servicing has consistently increased, with Nigeria paying $4.66 billion in 2024, up from $3.5 billion in 2023. Multilateral creditors, including the IMF, account for a majority of these payments. The IMF alone made up approximately 35 percent of Nigeria’s external debt repayments in 2024.
Fitch Ratings, a global credit rating agency, has projected Nigeria’s external debt service to rise further to $5.2 billion in 2025, including a substantial $1.1 billion Eurobond repayment due in November. While Fitch acknowledges that Nigeria’s external debt levels remain moderate and manageable, it warns of persistent challenges such as high-interest costs, weak government revenue performance, and limited fiscal space.
The agency notes that Nigeria’s government revenue remains structurally low, expected to average just 13.3 percent of GDP in 2025 and 2026, while interest payments on debt consume a significant share of government income — nearly 50 percent of federal government revenue is projected to go toward interest payments.
The escalating external debt service payments place additional pressure on Nigeria’s foreign reserves and government budget, potentially crowding out critical investments in infrastructure, social programs, and economic development initiatives. The government faces the challenge of balancing debt obligations with the need to stimulate economic growth and improve public services.
Economists stress the importance of diversifying Nigeria’s revenue sources and enhancing domestic resource mobilization to reduce over-reliance on external borrowing. Improved debt management strategies and transparent fiscal policies will be key to ensuring debt sustainability and maintaining investor confidence.
Nigeria’s expenditure of over $2 billion on external debt servicing in just four months underscores the growing financial obligations facing the country. While the full repayment of the IMF COVID-19 loan is a positive step, ongoing debt service commitments and high-interest costs remain a concern for the nation’s economic stability. Policymakers must prioritize strategic debt management and revenue reforms to safeguard Nigeria’s fiscal health in the coming years.