Nigeria’s Exterior Debt Servicing might Hit $5.2bn – Fitch

Nigeria’s exterior debt service is projected to rise to $5.2bn this yr, highlighting rising strain on public funds regardless of ongoing financial reforms, Fitch Scores has stated.

The credit standing company disclosed this in its newest score motion commentary printed on Friday, by which it upgraded Nigeria’s long-term foreign-currency issuer default score to ‘B’ from ‘B-’, with a steady outlook.

In accordance with the report, authorities exterior debt service will improve from $4.7bn in 2024 to $5.2bn in 2025.

This consists of $4.5bn in amortisation funds and a $1.1bn Eurobond compensation due in November.

Fitch famous, “Authorities exterior debt service is average however anticipated to rise to $5.2bn in 2025 (with $4.5bn of amortisations, together with a $1.1bn Eurobond compensation due in November 2025), from $4.7bn in 2024, and fall to $3.5bn in 2026.”

The company additionally cited a minor delay within the cost of a Eurobond coupon due on March 28, 2025, as a mirrored image of persistent challenges in public finance administration.

Though Nigeria’s exterior debt service stays inside manageable ranges, Fitch warned that high-interest prices, weak income efficiency, and restricted fiscal house stay vital considerations.

Fitch stated common authorities debt was anticipated to stay at about 51 per cent of GDP in 2025 and 2026.

Nonetheless, it expressed concern over the federal government’s income place, noting that curiosity funds will devour a considerable portion of revenue.

It acknowledged, “We count on common authorities revenue-to-GDP to rise however to stay structurally low (averaging 13.3 per cent in 2025–2026), largely accounting for a excessive common authorities curiosity/income ratio, above 30 per cent, with federal authorities curiosity/income ratio of almost 50 per cent.”

The company noticed that Nigeria’s gross reserves rose to $41bn on the finish of 2024, earlier than declining to $38bn on account of debt service funds.

Regardless of this, Fitch expects the nation’s reserves to common 5 months of present exterior funds over the medium time period, above the median for equally rated economies.

It added that latest coverage reforms had contributed to elevated overseas trade inflows and higher financial stability, with inflation projected to common 22 per cent in 2025.

Fitch acknowledged, “Internet official FX inflows by means of the CBN and autonomous sources rose by about 89 per cent in This fall 2024. We count on continued formalisation of FX exercise to assist the trade fee, though we anticipate modest depreciation within the quick time period.”

The company counseled the federal government’s dedication to financial reforms, together with the elimination of gasoline subsidies, liberalisation of the trade fee, and tightening of financial coverage.

It famous that these steps had improved coverage credibility and strengthened Nigeria’s means to soak up shocks.

Nonetheless, the company warned that dangers to Nigeria’s exterior and monetary place remained, significantly if oil costs fall or coverage implementation slows down.

Fitch’s newest evaluation comes amid earlier considerations raised by JP Morgan, which projected that Nigeria’s present account may swing right into a deficit if oil costs keep low for a chronic interval, doubtlessly pushing the naira past N1,700 per greenback.

Regardless of these challenges, Fitch maintained a steady outlook for the nation, saying the reforms had begun to yield outcomes.

The PUNCH earlier reported that Nigeria expended a complete of $5.47bn on exterior debt servicing between January 2024 and February 2025, in keeping with knowledge from the Central Financial institution of Nigeria.

Additionally, Nigeria spent a complete of N13.12 tn on debt servicing in 2024, representing a 68 per cent improve from the N7.8 tn recorded within the earlier yr, in keeping with an evaluation of information from the Debt Administration Workplace.

SOURCE: The PUNCH