Nigeria’s debt service payments fell sharply in February 2025, declining from $540 million in January to $276 million, according to the latest data from the Central Bank of Nigeria (CBN).
This drop coincides with the federal government’s ongoing initiatives to improve dollar availability, restructure debt, and lessen pressure on the foreign exchange market. Recent agreements with multilateral lenders and deferrals on some obligations may be the cause of the payment reduction.
Despite the drop in debt service costs, there was a sharp increase in Letters of Credit (LCs) issued for trade transactions. The CBN reported that LCs rose by 48%, reaching $95.6 million in February compared to $64.6 million in January. This suggests a recovery in import activities as businesses adapt to exchange rate fluctuations and government policies aimed at stabilizing trade financing.
President Bola Tinubu has stated that his administration has reduced Nigeria’s revenue-to-debt service ratio from 97% to 65% within the first 17 months of his tenure. The government continues to engage with international lenders and investors to address the country’s growing debt burden.
According to the Debt Management Office (DMO), Nigeria’s debt servicing costs surged by 69% in the first half of 2024, reaching N6.04 trillion—up from N3.58 trillion in the same period of 2023. This rise is largely attributed to the devaluation of the naira, which has increased the cost of repaying foreign debts.
The World Bank has raised concerns over rising debt service costs in developing countries, warning that the situation could lead to a financial crisis if not managed effectively. Chief Economist Indermit Gill stressed the need for coordinated global action to prevent further economic distress.
Higher oil revenue, better tax collection, and clever debt restructuring, according to experts, may help maintain Nigeria’s debt service obligations within reasonable bounds in the months ahead. Concerns over the nation’s overall debt load are, nevertheless, increasing, and calls are being made for tougher fiscal measures to stop future overborrowing.
