Fitch Ratings forecasts Nigeria’s external debt service to grow to $5.2 billion in 2025, up from $4.7 billion in 2024. Despite concerns over fiscal management and high-interest payments, the credit rating was upgraded from negative to stable. Nigeria’s government debt will remain at approximately 51% of GDP, highlighting ongoing financial challenges.
Fitch Ratings has projected Nigeria’s external debt service to rise to $5.2 billion in 2025. The Debt Management Office reported that external debt service was $1.07 billion as of December 2024. Fitch’s commentary, published on April 11, cites a rise in the service bill from $4.7 billion in 2024, which includes $4.5 billion in amortizations and a notable $1.1 billion Eurobond repayment due in November 2025.
The increasing debt burden means Nigeria must pay $5.2 billion for foreign loans in 2025, markedly higher than the previous year. A significant portion, $4.5 billion, covers principal repayments rather than just interest, indicating a substantial financial obligation ahead. Potential challenges were highlighted, as Nigeria was late on a payment in March, casting doubt on its fiscal management.
Nigeria’s total government debt is expected to remain close to 51% of its GDP over the next two years, meaning the government owes around $51 for every $100 produced by the economy. This fiscal pressure results from insufficient tax revenue; approximately 30% of total revenue is allocated to interest payments alone, while nearly half of the federal government’s revenue is similarly consumed by interest expenses.
Despite these challenges, Fitch improved Nigeria’s credit rating from negative to stable, representing a small positive shift in fiscal outlook. However, the ongoing issues related to debt management and revenue collection persist as critical areas for improvement.
In summary, Nigeria’s external debt service is projected to increase significantly to $5.2 billion in 2025. The government faces ongoing challenges related to high-interest payments and insufficient tax revenue to manage its debt effectively. Despite these factors, a slight improvement in Fitch’s credit rating offers a cautious outlook.
Original Source: businessday.ng
