Nigeria’s External Debt Service to Surge to $5.2 Billion in 2025, Says Fitch

Nigeria’s external debt service obligations are set to climb significantly this year, reaching a projected $5.2 billion, according to a recent forecast by global credit rating agency Fitch Ratings.

This marks a sharp rise from the $1.07 billion recorded at the end of 2024, based on figures from Nigeria’s Debt Management Office (DMO). The agency’s latest rating commentary, published on April 11, indicates the country will see continued debt service pressures into 2025.

Fitch attributed the increase primarily to amortisation payments, including a $1.1 billion Eurobond due in November 2025. Total amortisations are expected to hit $4.5 billion this year, contributing to the overall $5.2 billion debt service bill. The figure is projected to ease to $3.5 billion in 2026.

The rating agency also flagged recent issues in Nigeria’s fiscal management, citing a delayed coupon payment on a $4 billion Eurobond due March 28 as a red flag. Though ultimately resolved, the delay underscores persistent public finance challenges.

Despite the growing debt burden, Fitch expects Nigeria’s general government (GG) debt-to-GDP ratio to remain steady at around 51% in both 2025 and 2026 — roughly aligned with the median for countries rated ‘B’. The agency noted that over half of Nigeria’s public debt is denominated in local currency, which helps cushion external shocks. The average maturity of public debt also remains favorable at 10.9 years.

However, Fitch warned that government revenue remains a structural weak spot. While the revenue-to-GDP ratio is forecast to rise slightly to an average of 13.3% over the next two years, it remains well below global standards. As a result, Nigeria’s interest payments as a percentage of revenue are projected to exceed 30%, with the federal government’s ratio nearing a staggering 50% — more than triple the median for similarly rated economies.

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On a more optimistic note, Fitch highlighted strong domestic financing prospects, citing Nigerian banks’ high liquidity and appetite for government securities as key supports.

In a related development, Fitch recently revised Nigeria’s credit outlook from negative to stable, signalling a cautiously optimistic view of the country’s fiscal trajectory.