Nigeria’s Debt Servicing Reaches N2.2bn in Five Months: An Economic Challenge Amidst Strategic Borrowing

In the first five months of 2024, Nigeria’s debt servicing expenses surged to N2.2 billion, as revealed by the latest data from the Central Bank of Nigeria (CBN). This significant expenditure represents nearly half of the $4.8 billion that Fitch Ratings projected for the entire year, underscoring the escalating financial burden on the country.

Rising Debt Servicing Costs

The CBN’s International Payments Data indicates that the Federal Government (FG) allocated the highest amount to debt servicing in May 2024, with payments reaching $854.36 million. This figure is notably the highest for any single month over the past year, representing a staggering increase of 297 percent from April and 286.49 percent from May 2023.

Here’s a breakdown of the debt servicing expenditures for the first five months of 2024:

  • January: $560.52 million
  • February: $283.22 million
  • March: $276.16 million
  • April: $215.20 million
  • May: $854.36 million

The total amount spent on debt servicing during this period is approximately 96.32 percent higher than the $1.12 billion spent in the same period in 2023. This rise highlights the growing financial challenges faced by the Nigerian government in managing its debt obligations.

External Debt Service Projections

According to FBNQuest Research, Nigeria’s external debt service payments increased by $1.1 billion to $3.5 billion in 2023, comprising $1.9 billion in market debt payments and $1.6 billion in non-market debt payments. Fitch Ratings also forecasts that Nigeria’s external debt servicing will rise by $400 million to $5.2 billion in 2024, reflecting an anticipated increase in borrowings from the commercial debt market and concessional sources.

Government’s Borrowing Strategy

Despite the escalating costs, the Nigerian government has expressed its intention to focus more on domestic borrowing. However, the 2024 budget outlines plans for additional external borrowing of N1.8 trillion, with another N1.1 trillion expected from concessional lenders.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has announced forthcoming financial support from the World Bank. In a recent interview, Edun disclosed that the World Bank’s board would soon consider a $2.25 billion package for Nigeria, with $1.5 billion designated for Development Policy Financing. This funding aims to support Nigeria’s economic stabilization and growth efforts.

Additionally, Nigeria plans to issue a Eurobond in the second half of 2024. Citibank NA, Goldman Sachs, and JPMorgan Chase & Co have been appointed as advisors for this proposed issuance.

Impact on Trade and Remittances

The CBN data also highlighted a significant decline in Letters of Credit (LCs) issued in the first five months of 2024. LCs, a crucial payment method for the importation of goods, dropped by 63.26 percent to $279 million, compared to $762.03 million in the same period in 2023. The FX crisis, marked by a shortage of foreign currency, depreciation of the Naira, and stringent foreign exchange controls by the CBN, has severely impacted the issuance and utilization of LCs.

Conversely, total direct remittances increased by 28.55 percent to $841 million, compared to $654.51 million in the same period in 2023. This uptick in remittances provides a glimmer of hope for Nigeria’s foreign exchange reserves, which are crucial for maintaining economic stability.


Nigeria’s rising debt servicing costs and the government’s strategic borrowing plans underscore the challenges and opportunities in managing the country’s financial obligations. While external debt service payments are projected to rise, the government’s efforts to secure concessional loans and international support, such as the anticipated World Bank package, could provide much-needed relief. However, the decline in LCs and the ongoing FX crisis pose significant hurdles that need to be addressed to ensure sustainable economic growth.

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