Fitch Sees Nigeria’s External Debt at $5.2bn, Maintains Stable Outlook

The agency also cited a minor delay in the payment of a Eurobond coupon due on March 28, 2025, as a reflection of persistent challenges in public finance management.

The rating firm had upgraded Nigeria’s long-term foreign-currency issuer default rating to ‘B’ from ‘B-’, with a stable outlook.

The $5.2 billion in debt service, according to Fitch, includes $4.5 billion in amortisation payments and a $1.1 billion Eurobond repayment due in November.

The development highlights the growing pressure on public finances despite ongoing economic reforms by the federal government.

Fitch noted, “The government external debt service is moderate but expected to rise to $5.2 billion in 2025 (with $4.5bn of amortisations, including a $1.1 billion Eurobond repayment due in November 2025), from $4.7 billion in 2024, and fall to $3.5 billion in 2026.”

It warned that although Nigeria’s external debt service remains within manageable levels, high-interest costs, weak revenue performance, and limited fiscal space remain significant concerns, adding that general government debt was expected to remain at about 51 per cent of GDP in 2025 and 2026.

However, it expressed concerns over the government’s revenue position, noting that interest payments will consume a substantial portion of income.

“We expect general government revenue-to-GDP to rise but to remain structurally low (averaging 13.3 per cent in 2025–2026), largely accounting for a high general government interest/revenue ratio, above 30 per cent, with federal government interest/revenue ratio of nearly 50 per cent,” it stated.

The company observed that Nigeria’s gross reserves rose to $41 billion at the end of 2024, before declining to $38 billion due to debt service payments.

Despite this, Fitch expects the country’s reserves to average five months of current external payments over the medium term, above the median for similarly rated economies, adding that recent policy reforms had contributed to increased foreign exchange inflows and better monetary stability, with inflation projected to average 22 per cent in 2025.

“Net official FX inflows through the CBN and autonomous sources rose by about 89 per cent in Q4 2024. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term,” a part of the report stated.

It commended the government’s commitment to economic reforms, including the removal of fuel subsidies, liberalisation of the exchange rate, and tightening of monetary policy, noting that these steps had improved policy credibility and strengthened Nigeria’s ability to absorb shocks.

However, the agency warned that risks to Nigeria’s external and fiscal position remained, particularly if oil prices fall or policy implementation slows down.