Debt Crisis Alert: Fitch Warns Nigeria’s External Servicing Could Soar To $5.2bn

Fitch Projects Nigeria’s External Debt Service to Hit $5.2bn in 2025 Amid Economic Strains....KINDLY READ THE FULL STORY HERE▶

Fitch Ratings has projected that Nigeria’s external debt service will rise to $5.2bn in 2025, underscoring the mounting pressure on public finances despite ongoing economic reforms.

This projection was made in Fitch’s latest rating action commentary released on Friday, which also saw the agency upgrade Nigeria’s long-term foreign-currency issuer default rating from ‘B-’ to ‘B’, with a stable outlook.

The report revealed that the government’s external debt service will increase from $4.7bn in 2024 to $5.2bn in 2025, with $4.5bn allocated for amortisation payments and $1.1bn for a Eurobond repayment due in November.

Fitch noted that while the external debt service remains moderate, it is expected to climb to $5.2bn in 2025—comprising $4.5bn in amortisations, including the $1.1bn Eurobond payment in November—before decreasing to $3.5bn in 2026.

The agency also pointed to a delay in the payment of a Eurobond coupon due on March 28, 2025, as a sign of ongoing challenges in public finance management.

While Nigeria’s external debt service remains manageable, Fitch raised concerns about high interest payments, weak revenue generation, and limited fiscal space, which continue to pose significant risks.

Fitch further projected that general government debt will remain around 51% of GDP in 2025 and 2026. However, it flagged concerns over the government’s revenue position, noting that a large portion of income will be consumed by interest payments.

“We expect general government revenue-to-GDP to rise, but it will remain structurally low (averaging 13.3% in 2025–2026), leading to a high general government interest/revenue ratio of over 30%, with the federal government’s ratio approaching 50%,” Fitch stated.

The agency also observed that Nigeria’s gross reserves rose to $41bn at the end of 2024, but are expected to fall to $38bn due to debt servicing. Nevertheless, Fitch expects Nigeria’s reserves to cover five months of current external payments on average over the medium term, which is above the median for similarly rated economies.

Fitch acknowledged that recent policy reforms had bolstered foreign exchange inflows and enhanced monetary stability, with inflation forecasted to average 22% in 2025.