Market News

BY Oluwatosin Ogunjuyigbe 

Fitch, a global rating agency, has projected that Nigeria’s external debt service bill will increase to $5.2 billion this year.

According to the Debt Management Office (DMO), Nigeria’s external debt service was $1.07 billion as of December 2024.

In its rating commentary on Nigeria, published on April 11, the credit rating firm said the service bill would rise further in 2025.

“Government external debt service is moderate but expected to rise to USD5.2 billion in 2025 (with USD4.5 billion of amortisations, including a USD1.1 billion Eurobond repayment due in November 2025), from USD4.7 billion in 2024, and fall to USD3.5 billion in 2026,” Fitch said.

Nigeria’s debt payments are growing much bigger this year. In simple terms, the country needs to pay $5.2 billion toward its foreign loans in 2025, which is almost five times more than what it paid last year.

Most of this money ($4.5 billion) will go toward paying back the actual loans, not just interest. A big payment of $1.1 billion is due in November for an international bond.

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Fitch noticed Nigeria was late on a payment in March, which isn’t a good sign for how the country is handling its money.

The total government debt will stay around 51% of Nigeria’s economy for the next two years. This means for every $100 the Nigerian economy produces, the government owes about $51.

Compared to similar countries, the government doesn’t collect enough money through taxes and other sources. Because of this, a huge chunk of the money it does collect (about 30%) goes straight to paying interest on its debt. For the federal government specifically, almost half of its money goes just to interest payments.

Despite these challenges, Fitch did change Nigeria’s rating from negative to stable, which is a small positive sign.