Nigeria’s debt service payments surged by 49.2% year-on-year in the first four months of 2025, reaching $2.01 billion, up from $1.34 billion during the same period in 2024. This increase, disclosed in the Central Bank of Nigeria’s International Payments data, highlights the growing financial pressure the country faces in managing its external debt obligations.
This sharp rise underscores the country’s ongoing struggle with foreign exchange shortages and weak revenue generation. Analysts suggest that Nigeria’s economic challenges are becoming more acute as its ability to meet debt commitments becomes more strained, exacerbated by an underperforming revenue base.
Supporting this trend, the International Monetary Fund (IMF) has warned that Nigeria’s debt sustainability is under threat due to persistent fiscal deficits. The IMF projects the country’s fiscal shortfall will deepen, with government spending exceeding revenue by 4.5% in both 2025 and 2026, a deterioration from the 3.4% deficit recorded in 2024.
The General Government Overall Balance, which measures the gap between total government income and spending, is expected to worsen. Analysts warn that a persistent and growing deficit will force the government to borrow more, thereby inflating the national debt and making the economy more vulnerable to external shocks.
With declining revenues and increasing deficits, the government’s reliance on borrowing is likely to intensify. This trend could further elevate public debt levels, especially if borrowing costs rise due to high interest rates or reduced investor confidence, putting additional strain on Nigeria’s fiscal stability.
Source: Vanguard