Nigeria’s debt service payments saw a significant drop in February 2025, decreasing from $540 million in January to $276 million, according to the latest data from the Central Bank of Nigeria (CBN).
This decline comes as the federal government continues its efforts to restructure debt, increase dollar liquidity, and reduce pressure on the foreign exchange market. The reduction in payments may be linked to recent agreements with multilateral lenders and deferrals on some obligations.
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.
Experts believe that a combination of higher oil revenue, improved tax collection, and strategic debt restructuring could help keep Nigeria’s debt service payments at manageable levels in the coming months. However, there are growing concerns over the country’s total debt stock, with calls for stricter fiscal policies to prevent excessive borrowing in the future.
