Nigeria’s debt servicing costs surged by 49.2% year-on-year, reaching $2.01 billion in the first four months of 2025 (4M’25), compared to $1.34 billion during the same period in 2024. This was revealed in the International Payments data released by the Central Bank of Nigeria (CBN).
The sharp rise highlights the country’s ongoing struggle to manage its external debt amid persistent foreign exchange volatility and a weak revenue base. It also validates concerns raised earlier by the International Monetary Fund (IMF), which flagged Nigeria’s growing fiscal vulnerability and its impact on debt sustainability.
According to the IMF, Nigeria’s fiscal deficit is projected to deepen further, with the government expected to spend 4.5% more than its revenue in both 2025 and 2026. This forecast marks a worsening from 2024, when the General Government Overall Balance stood at -3.4% of GDP.
The General Government Overall Balance — which measures the difference between total government revenues and expenditures — serves as a critical indicator of fiscal health. A consistent deficit implies the need for increased borrowing, which could compound the country’s debt burden.
Financial analysts warn that Nigeria’s widening deficit, coupled with declining revenue and rising borrowing costs, will likely push the government into deeper reliance on debt. This scenario could heighten fiscal instability, especially if investor confidence weakens or interest rates climb.
With mounting debt obligations and limited fiscal room, experts stress the urgency for Nigeria to implement revenue-boosting reforms and enhance public financial management to avoid further erosion of economic resilience.
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