Fitch Ratings predicts Nigeria’s external debt service will rise to $5.2 billion in 2025, a significant increase from $1.07 billion in 2024. This amount includes major repayments, notably a $1.1 billion Eurobond due in November. Nigeria continues to struggle with revenue generation, leading to high interest payments, while its credit rating was recently upgraded from negative to stable.
Fitch Ratings has projected that Nigeria’s external debt service will escalate to $5.2 billion in 2025, based on the report from the Debt Management Office (DMO). As of December 2024, Nigeria’s external debt service was recorded at $1.07 billion. The credit rating agency indicated this increase is due to several factors, primarily amortisations, with a significant portion allocated for repaying loans and an international Eurobond payment in November 2025.
The analysis by Fitch shows that Nigeria’s debt service is expected to nearly quintuple from last year’s payment, indicating an urgent requirement for the country to meet its foreign loan obligations. Of the total expected service bill, $4.5 billion includes the repayment of principal loans, while a notable $1.1 billion is due for a Eurobond repayment. This scenario further indicates escalating financial pressures on the nation.
Concerns have been raised as Fitch noted a delay in payment by Nigeria in March, which reflects negatively on the country’s fiscal management. The overall government debt is projected to maintain around 51% of Nigeria’s economic output in the coming years, meaning the government owes approximately $51 for every $100 generated by the economy.
Furthermore, Nigeria is struggling with revenue generation through taxation, leading to about 30% of collected funds being directly applied to interest payments on its debt. For the federal government, the proportion is even higher, with nearly half of its budget allocated solely for interest obligations. Despite these financial challenges, Fitch’s revision of Nigeria’s rating from negative to stable offers a slight glimmer of hope.
In conclusion, Nigeria is poised to face substantial increases in its external debt service, projected to reach $5.2 billion in 2025. The country exhibits challenges in managing its debt obligations, with a significant portion of its revenue allocated to interest payments. However, the recent upgrade in its credit rating may suggest some stability amid these financial pressures, signaling a cautious yet optimistic outlook for Nigeria’s fiscal management.
Original Source: businessday.ng
