Nigeria’s debt servicing costs surged by 49.2 percent in the first four months of 2025, reaching $2.01 billion, compared to $1.34 billion recorded in the same period in 2024.
This sharp increase was disclosed in the Central Bank of Nigeria’s (CBN) latest International Payments data, highlighting growing pressure on the country’s external finances and its ability to manage debt amidst persistent foreign exchange constraints and a struggling revenue base.
The rise in debt service payments further validates earlier concerns raised by the International Monetary Fund (IMF), which warned that Nigeria's fiscal position is deteriorating and threatens long-term debt sustainability.
The IMF projected that Nigeria's fiscal deficit will expand significantly, with government expenditure expected to outpace revenue by 4.5 percent of GDP in both 2025 and 2026. This would mark a further decline from 2024, when the fiscal deficit was already at -3.4 percent of GDP.
The fiscal deficit—measured as the difference between total government revenue and expenditure—is a key indicator of a country’s financial health. When deficits grow larger, they often result in increased borrowing, driving up public debt.
Economic analysts warn that Nigeria’s widening deficit and heavy reliance on debt are unsustainable. "If this trend continues, the country risks a deeper debt trap, especially if borrowing costs rise due to high interest rates or diminished investor confidence," one analyst said.
The combination of falling government revenue, rising interest obligations, and a weak currency further complicates the situation. Many observers argue that unless urgent reforms are made to boost revenue generation—especially from non-oil sectors—Nigeria will face increasing difficulty in meeting its external obligations without jeopardizing economic stability.
With limited fiscal space and a growing debt burden, stakeholders say the government must prioritize prudent fiscal management and work toward long-term strategies to reduce dependency on borrowing.
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