In just the first four months of 2025, Nigeria has spent a staggering $2.01 billion on external debt servicing—an alarming 50% surge compared to the same period in 2024. This figure now makes up over 77% of the country’s total foreign exchange outflows, revealing a growing strain on Nigeria’s already fragile financial landscape.
A Debt Trap in the Making?
The Central Bank of Nigeria’s latest international payments report paints a stark picture: between January and April 2025, Nigeria’s total foreign payments—covering debt service, remittances, and letters of credit—reached $2.60 billion. Of that, debt repayments alone consumed $2.01 billion.
In comparison, debt servicing in early 2024 was $1.33 billion, representing 64.5% of that year’s $2.07 billion in FX outflows during the same period. The numbers suggest a worrying trend: as external obligations grow, Nigeria is burning through more of its FX reserves just to settle past debts.
The Spike That Signals Deeper Trouble
A closer look at monthly figures reveals that the pressure intensified in March and April:
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January 2025: $540.67 million (slightly lower than Jan 2024’s $560.52 million)
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February 2025: $276.73 million (compared to $283.22 million in Feb 2024)
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March 2025: $632.36 million (2x March 2024’s $276.17 million)
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April 2025: $557.79 million (up 159% from April 2024’s $215.20 million)
Combined, March and April alone accounted for nearly $1.2 billion in payments, suggesting large loan maturities may have kicked in, tightening Nigeria’s fiscal space further.
What This Means for Nigeria’s Economy
This swelling debt service bill is crowding out other essential uses of foreign exchange. With more than three-quarters of Nigeria’s FX outflows going to creditors, little is left for:
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Importing goods and services
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Funding critical infrastructure
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Supporting the naira
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Encouraging foreign investment
This imbalance underscores a more structural issue—Nigeria’s growing dependence on external borrowing and the rising cost of repaying it.
The IMF and the Legacy of COVID-Era Borrowing
The International Monetary Fund (IMF) recently confirmed that Nigeria has fully repaid the $3.4 billion emergency loan it received in April 2020 under the Rapid Financing Instrument to cushion the pandemic’s economic shocks.
“As of April 30, 2025, Nigeria has fully repaid the financial support of about $3.4 billion it requested and received in April 2020…” — IMF
However, the repayments don’t stop there. Nigeria is still obligated to pay about $30 million annually in Special Drawing Rights (SDR) charges due to the gap between its SDR holdings and allocations.
The Bigger Picture: A Growing Burden
In 2024 alone, Nigeria spent $4.66 billion on external debt servicing, a steep increase from $3.5 billion in 2023. Of this, $1.63 billion was paid to the IMF—mostly principal, with no interest or charges logged.
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Multilateral creditors made up 56% of the 2024 total ($2.62 billion)
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The IMF alone accounted for 35% of the external debt payments
These figures raise concerns about how sustainable Nigeria’s external debt strategy really is. With shrinking reserves, mounting repayments, and limited revenue buffers, Nigeria is walking a fiscal tightrope.
Final Thoughts: Debt Before Development?
Nigeria’s external debt repayments are now a dominant force shaping its economic future. The sharp rise in servicing costs is not just a financial issue—it’s a developmental one. Every dollar used to repay debt is a dollar not spent on healthcare, education, or infrastructure.
As the country confronts this growing challenge, one question becomes increasingly urgent:
How long can Nigeria afford to pay its past without sacrificing its future?
