Nigeria Spent $2.86 Billion on External Debt Servicing in Eight Months – CBN

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Nigeria spent $2.86 billion on external debt servicing between January and August 2025, according to new data released by the Central Bank of Nigeria (CBN).

The figure represents 69.1% of total foreign payments of $4.14 billion within the period, underscoring how debt obligations continue to dominate the country’s foreign exchange outflows.

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Year-on-Year Comparison

In the same period of 2024, Nigeria spent $3.06 billion on debt servicing, accounting for 70.7% of its total foreign payments of $4.33 billion.

This shows that while the 2025 debt service bill dropped by about $198 million (6.49%) compared to last year, repayments still absorbed nearly seven out of every ten dollars leaving the country.

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Volatile Monthly Payments

The CBN data highlight the erratic nature of Nigeria’s debt service profile:

• January 2025: $540.67m (vs $560.52m in Jan 2024)

• February: $276.73m (down nearly 49% from January)

• March: $632.36m (129% surge, vs $276.17m in Mar 2024)

• April: $557.79m (vs $215.20m in Apr 2024)

• May: $230.92m (sharp fall from $854.37m in May 2024)

• June: $143.39m (vs $50.82m in Jun 2024)

• July: $179.95m (vs $542.50m in Jul 2024)

• August: $302.30m (slightly above $279.95m in Aug 2024)

These fluctuations reflect the repayment schedules tied to Nigeria’s diverse external loan portfolio.

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Debt Service Dominates Forex Outflows

The persistent dominance of debt service in Nigeria’s external payments raises structural concerns:

1. Pressure on Reserves: Heavy outflows, such as in March 2025, strain foreign reserves.

2. Reduced Import Capacity: Scarce forex is diverted from critical imports and capital goods.

3. Fiscal Rigidity: Debt obligations are non-discretionary, limiting government spending flexibility.

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External Reserves on the Rise

Despite these pressures, Nigeria’s external reserves have crossed the $42 billion mark, the highest level in more than six years.

According to CBN data, reserves have been rising steadily since July 14, 2025, supported by higher crude oil output despite global oil prices trading below $70 per barrel — short of the government’s $75 budget benchmark.

Crude oil remains Nigeria’s dominant foreign exchange earner, contributing about 90% of inflows. Analysts attribute the reserve buildup largely to improved oil production volumes compared to previous years.

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Outlook

Analysts warn that while stronger reserves provide a buffer, Nigeria’s reliance on external borrowing and the high proportion of forex spent on debt service remain long-term risks. Addressing these vulnerabilities, they argue, will require a mix of debt restructuring, fiscal discipline, and export diversification.