Nigeria spent $5.47bn on foreign debt servicing, says CBN
Nigeria expended a total of $5.47bn on external debt servicing between January 2024 and February 2025, data from the Central Bank of Nigeria have shown.
The figures, published on the apex bank’s website, indicate the growing burden of debt obligations on the country’s external reserves and fiscal stability.
An analysis of the data revealed that debt service payments fluctuated over the period, with May 2024 recording the highest outflow at $854.37m, while June 2024 saw the lowest monthly payment of $50.82m.
A breakdown of the data showed a 1.9 per cent increase in debt service payments from $276.17m in March 2024 to $283.22m in February 2024.
However, in April 2024, the amount fell by 22.1 per cent to $215.20m, before surging by 297 per cent in May to $854.37m, marking the highest single-month expenditure in the 14-month period.
In June 2024, debt service payments plummeted by 94 per cent to $50.82m, the lowest recorded in the period under review.
The figure rebounded in July 2024, rising by 967.4 per cent to $542.50m. This was followed by a 48.4 per cent drop in August 2024 to $279.95m, before increasing by 84.2 per cent in September 2024 to $515.81m.
In October 2024, debt service payments remained largely unchanged, rising marginally by 0.01 per cent to $515.86m.
However, in November 2024, the figure dropped by 54.9 per cent to $232.50m, before increasing again in December 2024 by 41.4 per cent to $328.91m.
Debt service payments surged again in January 2025, rising by 64.4 per cent to $540.67m, before falling by 48.8 per cent in February 2025 to $276.73m.
The fluctuating nature of debt service payments highlights the continued pressure on Nigeria’s foreign exchange reserves.
With $5.47bn already spent on debt servicing in 14 months, concerns over the country’s debt sustainability and fiscal outlook persist.
Saturday PUNCH further observed that within the 14-month period, Nigeria spent about 63.66 per cent of its international payments on servicing foreign debts.
Nigeria’s total debt service costs, including external and domestic obligations, rose in the third quarter of 2024, reflecting the combined impact of increased external debt service payments and currency depreciation.
The total debt service cost for Q3 2024 reached an estimated N3.57tn, marking a quarter-on-quarter increase of N60bn or 1.71 per cent from N3.51tn recorded in Q2.
Data from the Debt Management Office showed that external debt service payments in Q3 amounted to $1.34bn, which translated to N2.14tn when converted at the September exchange rate of N1,601.03/$.
In comparison, the Q2 external debt service of $1.12bn was valued at N1.65tn, based on the June exchange rate of N1,470.19/$.
This reflects a 29.70 per cent increase in naira terms, primarily driven by the naira’s depreciation and a higher dollar obligation.
The exchange rate used for the external debt was provided by the DMO in its reports.
In dollar terms, Nigeria spent $1.34bn on external debt service between July and September 2024, a 19.44 per cent increase from the $1.12bn recorded in the previous quarter.
The rise in payments was primarily attributed to higher obligations to multilateral and bilateral creditors, alongside significant interest payments on commercial loans.
Data from the DMO revealed that multilateral debt service payments remained the largest component, totalling $712.66m in Q3, up by 6.04 per cent from $672.01m in Q2.
This accounted for 53.26 per cent of total external debt service payments, driven by increases in both principal repayments and interest charges.
Notably, payments to the International Monetary Fund rose slightly to $406.98m from $404.24m in the previous quarter.
Bilateral debt service payments experienced a significant Q-o-Q rise of 325.52 per cent, increasing to $186.92m from $43.92m in Q2.
This sharp increase was largely driven by payments to China’s Exim Bank, which rose to $182.04m in Q3 from zero in Q2.
Other bilateral creditors, including the Exim Bank of India and the French Development Agency, recorded modest increases in repayments.
Commercial debt service obligations, including Eurobonds and other syndicated loans, totalled $438.68m in Q3, marking an 8.48 per cent rise from $404.46m in Q2.
Eurobond interest payments accounted for $427.72m of this amount, maintaining their dominant share of commercial debt service costs.
The approved 2025 Appropriation Bill of N54.99tn includes an allocation of N14.32tn for debt servicing.
With such a large share of revenue allocated to debt repayment, the government’s capacity to fund public services, infrastructure, and other developmental projects is increasingly constrained.
In his national broadcast to mark Nigeria’s 64th Independence Anniversary, President Bola Tinubu boasted that his administration reduced the debt service ratio from 97 per cent to 68 per cent.
Tinubu also said his administration was committed to stopping the vicious cycle of overreliance on borrowing for public spending and the resulting stress on managing scarce government resources caused by debt service.
He noted the country could not continue to service its debt with 90 per cent of its revenue, as this was a recipe for destruction.
Speaking earlier with Saturday PUNCH, the President of the Nigerian Economic Society, Prof Adeola Adenikinju, said, “There is little we can do regarding our debt servicing. This is an obligation that we owe, and it will do a lot of damage to our image if we don’t pay. That is a consequence of past years of mismanagement and dependence on debt to run the government.”
He noted that spending on debt servicing will not yield any positive benefit for the Nigerian economy.
“It is sad because debt service will not do anything positive for the economy. It is not going to improve infrastructure. It is not going to enhance economic growth. It is not going to yield any significant positive effect on the economy. We have been wasteful in the past, and that is the consequence we have to deal with now,” he said.
