Nigeria’s external debt servicing costs jumped by 49.2% year-on-year in the first four months of 2025, reaching $2.01 billion, up from $1.34 billion in the same period of 2024, according to newly released International Payments data from the Central Bank of Nigeria (CBN).
The sharp rise highlights the mounting pressure on the country’s public finances as it struggles with persistent foreign exchange shortages, sluggish revenue growth, and a growing reliance on external borrowing.
The trend reinforces warnings from the International Monetary Fund (IMF) earlier this year, which cautioned that Nigeria’s debt sustainability is under increasing threat due to widening fiscal deficits and weak revenue performance.
According to the IMF, Nigeria’s fiscal deficit is expected to worsen, with government expenditure projected to exceed revenue by 4.5% of GDP in both 2025 and 2026. That would mark a further deterioration from the -3.4% fiscal balance recorded in 2024, based on the IMF’s General Government Overall Balance metric.
This balance reflects the gap between the government’s total income including tax revenues and oil earnings and its spending on infrastructure, salaries, subsidies, and debt service.
Analysts warn that the deepening deficit means Nigeria will need to borrow more, pushing the national debt burden higher and exposing public finances to increased risk especially if borrowing costs rise amid global interest rate volatility or weakening investor confidence.
They note that without strong revenue reforms or cost-cutting measures, debt service obligations could consume a growing share of the national budget, reducing room for critical investments in infrastructure, education, and healthcare.
With revenues under pressure and borrowing costs elevated, the government’s ability to manage its fiscal position may become increasingly constrained, leaving it more vulnerable to economic shocks and shifts in global financial conditions.
