Nigeria’s Foreign Debt Service Burden Exceeds $5 Billion in 14 Months

The Central Bank of Nigeria reported a $5.47 billion expenditure on foreign debt servicing from January 2024 to February 2025, indicating stress on fiscal stability. Foreign exchange direct remittances increased by 1.3% to $180.03 million. Debt service payments fluctuated significantly, with peaks and lows observed throughout this period, emphasizing the challenges posed to Nigeria’s financial landscape.

The Central Bank of Nigeria (CBN) has reported that the nation spent approximately $5.47 billion on foreign debt servicing between January 2024 and February 2025, highlighting the escalating pressure on the country’s fiscal stability and external reserves. In the same period, foreign exchange direct remittances rose by 1.3% year-on-year to $180.03 million, indicating some positive financial trends amidst the burden of debt.

Debt service payments peaked at $854.37 million in May 2024, the maximum outflow registered during this review, and reached a low of $50.82 million in June 2024. A comparative analysis of the debt service obligations revealed a slight uptick of 1.9% with $283.22 million recorded in February, compared to $276.17 million in March 2024.

Total debt service liabilities in the third quarter of 2024 amounted to approximately N3.57 trillion, reflecting a quarter-on-quarter increase of N60 billion, or 1.71%, from N3.51 trillion in Q2. There were notable fluctuations in the monthly debt service obligations, including a significant rise of 297% in May 2024, contrasted by a subsequent decline of 94% in June to $50.82 million.

In August, borrowing obligations experienced a drop of 48.4% to $279.95 million, before rebounding by 84.2% to $515.81 million in September. The CBN indicated stability in October, yet payments fluctuated again, with January 2025 seeing a 64.4% increase to $540.67 million, followed by a fall of 48.8% to $276.73 million in February 2025. These variations further highlight the ongoing strain on the country’s foreign exchange reserves.

The CBN also noted an increase in foreign exchange direct remittances, which has implications for Nigeria’s financial landscape. The total remittances for the initial two months of 2025 showed a marked increase following a decline in 2024, which closed at $1.91 billion. This decline, approximately 3.5% from 2023’s $1.98 billion, raised concerns despite a higher number of Nigerians emigrating. However, the initial figures for 2025 suggest that reforms implemented by the CBN may be conducive to economic improvement.

In summary, the data released by the Central Bank of Nigeria reveals significant expenditures on foreign debt service and modest improvements in foreign exchange direct remittances. The ongoing challenges with debt payments continue to exert pressure on the nation’s financial health, while initial indications for 2025 suggest potential recovery is underway, reflecting the effectiveness of recent reforms. Continuous monitoring will be essential to assess the long-term sustainability of these positive trends amidst existing fiscal pressures.

Original Source: www.arise.tv