According to Fitch Ratings, Nigeria is projected to spend $5.2 billion on external debt servicing in 2025. The credit rating agency disclosed this in its latest rating action commentary published on Friday.
The agency also cited a minor delay in the payment of a Eurobond coupon due on March 28, 2025, as a reflection of persistent challenges in public finance management.
According to the report, the government’s external debt service will increase from $4.7 billion in 2024 to $5.2 billion in 2025.
This includes $4.5 billion in amortization payments and a $1.1 billion Eurobond repayment due in November.
The development highlights the growing pressure on public finances despite ongoing economic reforms by the federal government.
Fitch noted, “Government external debt service is moderate but expected to rise to $5.2bn in 2025 (with $4.5bn of amortizations, including a $1.1bn Eurobond repayment due in November 2025), from $4.7bn in 2024, and fall to $3.5bn in 2026.”
Fitch’s latest assessment comes amid earlier concerns raised by JP Morgan, which projected that Nigeria’s current account could swing into a deficit if oil prices stay low for a prolonged period, potentially pushing the naira beyond N1,700 per dollar.
Although Nigeria’s external debt service remains at manageable levels, Fitch warned that high-interest costs, weak revenue performance, and limited fiscal space remain significant concerns.
Fitch said general government debt was expected to remain at about 51 per percent of GDP in 2025 and 2026
However, it expressed concern over the government’s revenue position, noting that interest payments will consume a substantial portion of income.
It stated, “We expect general government revenue-to-GDP to rise but to remain structurally low (averaging 13.3 percent in 2025–2026), largely accounting for a high general government interest/revenue ratio, above 30 percent, with a federal government interest/revenue ratio of nearly 50 percent.”
The agency observed that Nigeria’s gross reserves rose to $41 billion at the end of 2024 before declining to $38 billion due to debt service payments.
Despite this, Fitch expects the country’s reserves to average five months of current external payments over the medium term, above the median for similarly rated economies.
It added that recent policy reforms had contributed to increased foreign exchange inflows and better monetary stability, with inflation projected to average 22 percent in 2025.
Fitch stated, “Net official FX inflows through the CBN and autonomous sources rose by about 89 percent in Q4 2024. We expect continued formalization of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term.”
The agency commended the government’s commitment to economic reforms, including the removal of fuel subsidies, liberalization of the exchange rate, and tightening of monetary policy.
It noted that these steps had improved policy credibility and strengthened Nigeria’s ability to absorb shocks.
However, the agency warned that risks to Nigeria’s external and fiscal position remained, particularly if oil prices fell or policy implementation slowed down.
Despite these challenges, Fitch maintained a stable outlook for the country, saying the reforms had begun to yield results.
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