Nigeria has spent a total of $2.86bn on external debt service bill within the first eight months of 2025, according to fresh figures released by the Central Bank of Nigeria (CBN).
The amount, which represents 69.1 per cent of the country’s total foreign payments of $4.14bn, underscores the persistent strain of debt obligations on Africa’s largest economy.
By comparison, in the same period of 2024, the nation recorded $3.06bn in debt service, accounting for 70.7 per cent of total foreign payments of $4.33bn.
While this year’s outflow reflects a marginal drop of $198m, the proportion of Nigeria’s debt service bill to foreign payments remains stubbornly high—showing that nearly seven in every ten dollars leaving the country go into debt repayments rather than trade or investment.
Monthly breakdown of Nigeria’s debt service bill
A closer look at the CBN’s international payments data highlights the volatility of Nigeria’s repayment schedule.
January 2025: $540.67m, down 3.5% from $560.52m in January 2024.
February 2025: $276.73m, slightly below the $283.22m recorded in February 2024.
March 2025: $632.36m, a sharp surge from $276.17m in March 2024, representing a 129% increase.
April 2025: $557.79m, more than double the $215.20m in April 2024.
May 2025: $230.92m, a steep decline from $854.37m in May 2024.
June 2025: $143.39m, up from $50.82m in June 2024.
July 2025: $179.95m, far below the $542.5m spent in July 2024.
August 2025: $302.3m, slightly higher than the $279.95m recorded in August 2024.
These month-by-month swings reveal an unpredictable debt repayment pattern, which experts say complicates fiscal planning.
For instance, while May saw a sharp decline, March and April posted extraordinary increases in outflows.
Implications of Nigeria’s debt service bill
The dominance of debt service in Nigeria’s foreign exchange outflows highlights a pressing challenge.
Despite spending nearly $200m less on repayments compared to last year, the debt burden continues to swallow the bulk of international reserves that could otherwise be channelled into economic growth, infrastructure, or import financing.
Financial analysts argue that such a high debt service ratio leaves the economy vulnerable, especially in a period when Nigeria struggles with sluggish revenue mobilisation and fragile investor confidence.
Fitch Ratings’ outlook
Credit rating agency Fitch Ratings recently projected that Nigeria’s external debt service will rise to $5.2bn in 2025, up from $4.7bn in 2024.
This includes $4.5bn in amortisation payments and a significant $1.1bn Eurobond repayment due in November 2025.
Fitch further indicated that while the country’s debt service obligations are currently moderate, pressures from high-interest costs, weak revenue collection, and limited fiscal space remain a serious concern.
It warned that Nigeria’s revenue-to-GDP ratio, projected at 13.3% in 2025–2026, remains structurally low.
This will result in an elevated government interest-to-revenue ratio, with the Federal Government’s own ratio expected to near 50%.
The agency also flagged a minor delay in servicing a Eurobond coupon in March 2025 as evidence of persistent public finance management challenges.
Broader concerns for economic stability
Nigeria’s debt-to-GDP ratio is expected to hover around 51% in both 2025 and 2026, a level Fitch describes as moderate compared to some peers.
However, the true challenge lies in revenue mobilisation.
With interest payments consuming nearly half of government income, fiscal space for investment in education, healthcare, and infrastructure remains limited.
Experts have also warned that the heavy debt service bill restricts the Central Bank’s ability to stabilise the naira, as foreign exchange outflows are dominated by external obligations.
This, they argue, may undermine efforts to attract foreign direct investment and strengthen macroeconomic stability.
While the CBN data shows a slight improvement in debt service payments compared to 2024, the persistently high share of outflows devoted to debt highlights Nigeria’s fiscal fragility.
The government faces the dual challenge of meeting maturing obligations while also mobilising enough revenue to fund critical projects.
As Fitch Ratings and other global agencies have cautioned, without a significant boost in revenue collection and effective expenditure management, Nigeria risks being trapped in a cycle where debt repayments continue to erode fiscal flexibility.
For now, the $2.86bn debt service bill in eight months is a reminder that Nigeria’s economic priorities remain heavily tilted towards managing debt, leaving limited space for transformative investments.
