Fitch Ratings has projected that Nigeria’s external debt service will increase to $5.2 billion in 2025, up from $4.7 billion in 2024. The credit rating agency disclosed this in its latest commentary published on Friday.
Fitch also pointed to a brief delay in the payment of a Eurobond coupon due on March 28, 2025, as indicative of ongoing challenges in public financial management.
Despite these concerns, the agency recently upgraded Nigeria’s long-term foreign-currency issuer default rating from ‘B-’ to ‘B’, maintaining a stable outlook.
According to the report, the projected $5.2 billion in external debt service obligations for 2025 includes $4.5 billion in amortisation payments and a $1.1 billion Eurobond repayment due in November. While still considered moderate, this increase underscores mounting pressure on Nigeria’s public finances despite the federal government’s ongoing economic reforms.
Fitch noted:
“Government external debt service is moderate but expected to rise to $5.2bn in 2025 (with $4.5bn of amortisations, including a $1.1bn Eurobond repayment due in November 2025), from $4.7bn in 2024, and fall to $3.5bn in 2026.”
The report also referenced concerns previously raised by JP Morgan, warning that Nigeria’s current account could slip into deficit if oil prices remain low for an extended period—potentially pushing the naira beyond N1,700 to the dollar.
Although debt service levels remain manageable, Fitch cautioned that high interest costs, weak revenue generation, and limited fiscal space continue to pose significant risks. It projects general government debt to remain around 51% of GDP in both 2025 and 2026.
More worryingly, the agency highlighted the strain of interest payments on government revenue.
“We expect general government revenue-to-GDP to rise but to remain structurally low (averaging 13.3% in 2025–2026), largely accounting for a high general government interest/revenue ratio, above 30%, with the federal government’s ratio nearing 50%,” Fitch said.
Nigeria’s gross reserves, according to the report, increased to $41 billion at the end of 2024 before declining to $38 billion due to debt service outflows. Nonetheless, Fitch expects reserves to average the equivalent of five months of current external payments over the medium term—above the median for peer-rated countries.
The agency acknowledged recent reforms had supported a surge in foreign exchange inflows and improved monetary stability. Inflation is projected to average 22% in 2025.
“Net official FX inflows through the CBN and autonomous sources rose by about 89% in Q4 2024. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term,” Fitch added.
It praised the federal government’s reform efforts, including the removal of fuel subsidies, liberalisation of the exchange rate, and tighter monetary policy, noting that these actions have enhanced policy credibility and improved Nigeria’s resilience to shocks.
However, Fitch warned that Nigeria’s external and fiscal positions remain vulnerable—particularly in the event of a decline in oil prices or a slowdown in reform momentum.
Despite these risks, the agency retained its stable outlook for Nigeria, stating that the government’s reform agenda is beginning to yield tangible results.