Nigeria Spent $9.8bn Servicing Foreign Loans In 5 Years – DMO

Nigeria has expended a cumulative $9.8 billion on servicing its foreign obligations over five years, new data from the Debt Management Office (DMO) has shown.

The data also showed that the total stock of external debt surged by more than 35 per cent with Nigeria’s external debt climbing from $38.391 billion in 2021 to $51.856 billion as of the end of December 2025.

This has underscored a steady accumulation of foreign liabilities amid persistent fiscal pressures and exchange rate vulnerabilities.

A breakdown of the debt service payments showed a consistent upward trajectory, reflecting both increased borrowing and tightening global financial conditions. In 2021, external debt servicing totalled $2.109 billion, with Eurobond repayments accounting for the dominant $1.306 billion share.

By 2022, servicing costs had risen to $2.405 billion. Eurobonds remained a major cost drive focus on obligations to the International Development Agency (IDA), contributing $446.064 million

The upward trend became more pronounced in 2023, when total debt service payments climbed to $3.503 billion. Eurobond commitments increased to $1.684 billion, while IDA payments rose to $574.302 million, reflecting a broad-based rise in external obligations.

Pressure intensified further in 2024, with total servicing costs jumping sharply to $4.656 billion. Notably, repayments to the International Monetary Fund (IMF) surged to $1.628 billion, signalling the weight of emergency and balance-of-payments support facilities accessed in prior years.

Eurobond servicing totalled $1.152 billion, while IDA payments totalled $663.23 million.

By 2025, Nigeria’s external debt service bill had risen to $5.150 billion, the highest level during the review period.

Eurobond repayments alone accounted for $2.493 billion, reinforcing concerns over the cost and structure of commercial borrowing. IMF obligations eased to $816.28 million, while IDA payments rose further to $769.235 million.

The steady rise in debt servicing costs has also heightened concerns about Nigeria’s fiscal sustainability, particularly amid volatile oil revenues and persistent foreign exchange constraints. With a larger share of government revenue now directed towards debt obligations, fiscal space for critical infrastructure and social investments remains constrained.

Economic experts warn that without a commensurate increase in foreign exchange earnings and stronger revenue mobilisation, the country may continue to face elevated debt service risks.

They also stress the need for a more strategic approach to external borrowing, with greater emphasis on concessional financing and projects that deliver clear economic returns.

Chief executive of CFG Advisory, Tilewa Adebajo, warned that the country’s debt obligations are fast becoming unsustainable, with total public debt rising to N159.27 trillion as at the end of last year, according to DMO.

“The country’s debt burden has become unsustainable, especially in the light of the N35 trillion deficit in the 2026 budget and a debt-to-revenue ratio heading towards 100 per cent,” Adebajo stated.

Additionally, Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co., expressed concern over the growing reliance on external borrowing, particularly in foreign currency. He cautioned that while dollar borrowing may appear cheaper due to lower interest rates, the real cost must be evaluated in naira terms.

“While dollar borrowing may appear cheaper on paper due to lower interest rates, that view is incomplete. The real burden must be assessed in naira terms, especially since these are long-term obligations. By the time repayments fall due, exchange rate movements could significantly increase the naira cost of servicing the debt,” Olubunmi said.

According to him, the strategy exposes the country to inherent currency risks, noting that persistent inflation differentials between Nigeria and advanced economies would likely drive naira depreciation over Understandably,le that the government is turning to dollar financing to manage funding costs, but this approach carries embedded currency risk that cannot be ignored,” he added.