Nigeria’s complete debt service funds dropped considerably from $540 million in January 2025 to $276 million in February 2025.
That is in line with the Central {Bank} of Nigeria (CBN)’s newest information on exterior sector funds.
This decline comes amid ongoing efforts by the federal authorities to restructure its debt portfolio, enhance greenback liquidity, and ease strain on the international alternate market.
The figures, revealed on the apex {bank}’s web site, spotlight the growing pressure of debt obligations on Nigeria’s exterior reserves and total fiscal sustainability.
Analysts recommend that latest debt reimbursement deferrals and negotiations with multilateral lenders could have contributed to the decrease outflows for the month.
Surge in Letters of Credit score
Whereas debt service funds declined, Letters of Credit score (LCs) rose sharply, indicating elevated financing of commerce transactions.
- The CBN reported that LCs issued in February 2025 totaled $95.6 million, a 48% improve from $64.6 million in January 2025.
- The rise in LCs suggests a restoration in import-related actions, notably as companies alter to the fluctuating naira alternate fee and authorities insurance policies geared toward stabilizing commerce financing.
- International Reserves and Authorities Measures
- President Bola Tinubu has mentioned within the first 17 months of his administration, Nigeria’s revenue-to-debt service ratio has lowered to 65% from 97%.
The federal authorities has continued engagements with international lenders and traders to ease Nigeria’s rising debt burden.
The CBN’s financial coverage route in latest months has centered on stabilizing the naira whereas balancing exterior obligations.
Extra insights
Based on the Debt Administration Workplace (DMO), Nigeria’s debt servicing funds have surged by 69% within the first half of 2024, reaching N6.04 trillion, up from N3.58 trillion recorded in the identical interval of 2023.
- Nairametrics reported that this sharp rise in debt service obligations, probably pushed by naira devaluation for international debt repayments, displays the rising burden on the Federal Authorities as debt reimbursement consumes a good portion of its {financial} sources.
- In an earlier assertion, the World {Bank} expressed deep concern over the escalating debt service prices which can be burdening growing nations worldwide. Indermit Gill, the World {Bank}’s Chief Economist, and Senior Vice President, emphasised the gravity of the scenario, highlighting the potential for a widespread {financial} disaster if instant and coordinated actions will not be taken.
- Consultants consider {that a} mixture of upper oil revenues, improved tax assortment, and strategic debt restructuring may assist maintain decrease debt service funds within the coming months.
Nevertheless, issues stay over the nation’s rising complete debt inventory and the necessity for stronger fiscal self-discipline to stop extreme borrowing.