FG Disburses $2bn For External Debt Servicing In Four Months

Between January and April 2025, Nigeria’s expenditure on servicing its external debt soared to approximately $2.01 billion, reflecting a sharp 50% increase compared to the $1.33 billion paid during the same timeframe in 2024. This data comes from the Central Bank of Nigeria’s latest international payments report.

The figures reveal that debt servicing consumed a substantial portion—77.1%—of Nigeria’s overall international payments over these four months. This represents a significant rise from the 64.5% share recorded in the first quarter of the previous year, highlighting an escalating financial burden.

Overall, Nigeria’s international transactions—which encompass debt repayments, remittances, and letters of credit—totaled $2.60 billion by the end of April 2025, up from $2.07 billion during the equivalent period in 2024. Analysts point to this trend as a clear indicator of growing pressures on the nation’s foreign exchange reserves, which reportedly contracted by around $3 billion in the review period.

A closer examination of monthly payments reveals relative stability at the start of the year. January 2025 saw payments of $540.67 million, slightly under the $560.52 million paid the year before, while February’s figure remained nearly unchanged at $276.73 million compared to $283.22 million in 2024.

The landscape shifted dramatically in March when debt repayments surged to $632.36 million—more than double the $276.17 million remitted the previous March. This upward trend persisted into April, with payments totaling $557.79 million, marking a 159% increase from the $215.20 million disbursed in April 2024.

In just two months, March and April combined, Nigeria channeled nearly $1.2 billion towards external debt obligations, underscoring the maturity of substantial loan agreements within this period. Observers have linked this surge to repayments on a loan secured from the International Monetary Fund. The IMF has confirmed that Nigeria has fully repaid the $3.4 billion it received under the Rapid Financing Instrument, a program initiated to mitigate the economic impacts of the COVID-19 pandemic.

These developments illuminate the growing challenges Nigeria faces as it manages rising debt servicing costs amid a volatile global economic environment marked by fluctuating currency values and tighter fiscal conditions.

In a statement sent to journalists on behalf of Mr Christian Ebeke, the IMF Resident Representative for Nigeria, the Fund said the repayment was completed on April 30, 2025. The loan, disbursed in April 2020, was aimed at helping Nigeria address a sharp fall in oil prices, economic contraction, and fiscal pressures caused by the pandemic.

“As of April 30, 2025, Nigeria has fully repaid the financial support of about $3.4bn it requested and received in April 2020 from the International Monetary Fund under the Rapid Financing Instrument to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices,” the IMF stated.

Although Nigeria has fully repaid the principal amount of its $3.4 billion loan from the International Monetary Fund (IMF), the country remains obligated to meet ongoing annual payments related to Special Drawing Rights (SDR) charges. The IMF has indicated that Nigeria is expected to pay approximately $30 million each year in these SDR-related fees over the coming years.

These charges arise from the gap between Nigeria’s current SDR holdings—amounting to SDR 3,164 million (roughly $4.3 billion)—and its total cumulative SDR allocation of SDR 4,027 million (approximately $5.5 billion). The fees are calculated based on the SDR interest rate, which is subject to weekly adjustments, and will persist until Nigeria’s SDR holdings equal its allocated amount.

Notably, Nigeria’s $3.4 billion loan under the IMF’s Rapid Financing Instrument was among the largest disbursements globally through this facility. The loan terms were comparatively favorable, distinguishing it from more conventional IMF lending programs.

Africa Today New, New York