Nigeria’s debt service drops to $276 million in February 2025 – CBN

Nigeria’s whole debt service funds dropped considerably from $540 million in January 2025 to $276 million in February 2025.

That is in accordance with the Central Bank of Nigeria (CBN)’s newest knowledge on exterior sector funds.

This decline comes amid ongoing efforts by the federal authorities to restructure its debt portfolio, enhance greenback liquidity, and ease strain on the international change market.

The figures, revealed on the apex bank’s web site, spotlight the growing pressure of debt obligations on Nigeria’s exterior reserves and total fiscal sustainability.

Analysts counsel that latest debt compensation deferrals and negotiations with multilateral lenders could have contributed to the decrease outflows for the month.

Surge in Letters of Credit score

Whereas debt service funds declined, Letters of Credit score (LCs) rose sharply, indicating elevated financing of commerce transactions.

• The CBN reported that LCs issued in February 2025 totaled $95.6 million, a 48% enhance from $64.6 million in January 2025.
• The rise in LCs suggests a restoration in import-related actions, notably as companies modify to the fluctuating naira change fee and authorities insurance policies geared toward stabilizing commerce financing.
• International Reserves and Authorities Measures
• President Bola Tinubu has mentioned within the first 17 months of his administration, Nigeria’s revenue-to-debt service ratio has diminished to 65% from 97%.

The federal authorities has continued engagements with world lenders and buyers to ease Nigeria’s rising debt burden.

The CBN’s financial coverage path in latest months has targeted on stabilizing the naira whereas balancing exterior obligations.

Extra insights

In accordance with the Debt Administration Workplace (DMO), Nigeria’s debt servicing funds have surged by 69% within the first half of 2024, reaching N6.04 trillion, up from N3.58 trillion recorded in the identical interval of 2023.

• Nairametrics reported that this sharp rise in debt service obligations, doubtless pushed by naira devaluation for international debt repayments, displays the rising burden on the Federal Authorities as debt compensation consumes a good portion of its monetary sources.
• In an earlier assertion, the World Bank expressed deep concern over the escalating debt service prices which can be burdening creating nations worldwide. Indermit Gill, the World Bank’s Chief Economist, and Senior Vice President, emphasised the gravity of the state of affairs, highlighting the potential for a widespread monetary disaster if quick and coordinated actions aren’t taken.
• Specialists consider {that a} mixture of upper oil revenues, improved tax assortment, and strategic debt restructuring may assist maintain decrease debt service funds within the coming months.

Nonetheless, considerations stay over the nation’s rising whole debt inventory and the necessity for stronger fiscal self-discipline to stop extreme borrowing.