Worrisome: President Tinubu’s $5.2bn External Debt Servicing In 2025
BY INWALOMHE DONALD
NIGERIA spent about $5.21bn servicing external debt obligations in 2025, accounting for more than 72 per cent of the country’s total international payments during the year, data obtained from the Central Bank of Nigeria has shown. In April 2025, the credit rating agency projected that Nigeria’s external debt service would rise to $5.2bn in 2025.
High debt servicing costs have severely constrained the Nigerian Federal Government’s ability to fund capital projects, with debt service payments frequently outpacing capital expenditure in recent years. As of early 2026, debt servicing continues to consume a significant portion of government revenue, leaving limited fiscal space for infrastructure development and social investments.
Debt servicing has consistently exceeded capital spending. For example, in 2025, debt service-to-revenue ratios reached critical levels, with early data indicating a 131 percent ratio in January/February. The surge in debt servicing has resulted in significant underfunding of Ministries, Departments, and Agencies (MDAs), with reports of approximately ₦15 trillion in underfunding over three years (up to 2025).
I must express my concern over the nation’s rising debt profile, particularly the $24.14 billion external borrowing plan for 2025–2026, amid increasing poverty. He advocates for reducing reliance on foreign loans to fund recurrent expenditure and emphasizes directing borrowing towards productive, capital-intensive, and growth-enhancing projects.
According to Fitch Ratings, government external debt service will increase from $4.7bn in 2024 to $5.2bn in 2025. This includes $4.5bn in amortisation payments and a $1.1bn Eurobond repayment in November 2025. It is worrisome that President Bola Tinubu is taking more loans despite the fact that Nigeria is having problem with increasing high cost of debt servicing. Debt servicing took more than 27 per cent of Nigeria’s 2025 budget.
Nigeria’s debt is about $100 billion with $45.9 billion external debt and $51.2 billion domestic debt. The budget for debt servicing is more than the budget of Education, Health and Defence put together in 2025 budget. President Tinubu is paying more attention to obtain more loans and pay less attention to economic consequences of the high cost of debt servicing in Nigeria.
Since assuming office in May 2023, Tinubu has presided over what is becoming one of Nigeria’s most aggressive borrowing campaigns in recent history. In just two years, Nigeria has secured $29.2 billion in loans — a massive financial commitment that will shape the nation’s economic trajectory for decades. Nigeria recorded zero funding of capital projects in the same period.
While many Nigerians seem focused on day-to-day survival, the mounting debt quietly grows in the background, accruing interest and setting the stage for future repayment by citizens — including those yet unborn.
This cycle has been exacerbated by the devaluation of the naira and persistent fiscal deficits. As of the first quarter of 2025, Nigeria’s public debt stood at N149.39 trillion, a sharp increase from N121.7 trillion in the same period of 2024.
The Debt Management Office (DMO) reported that domestic debt comprised N78.76 trillion (52.7 per cent) of this total, while external debt was N70.63 trillion (47.3 per cent). This places the country’s debt-to-GDP ratio at 52 per cent, a level that exceeds the legal threshold of 40 per cent. According to a forecast by BudgIT, total public debt could reach N187.79 trillion by the end of 2025.
The World Bank recommends a ratio not exceeding 22.5 per cent, highlighting Nigeria’s challenges in managing its debt service obligations relative to its revenue. World Bank benchmark: The World Bank suggests a ratio below 22.5 per cent as a sustainable level.
Nigeria’s Debt Servicing Ratio reached critical levels, sometimes exceeding 97 per cent (meaning nearly all revenue went to debt servicing).
Presidential claims (Nov 2024): President Tinubu reported a significant reduction to 65 per cent in late 2024, from approximately 97 per cent when his administration began.
Inwalomhe Donald, a Nigerian public policy analyst and writer writes via inwalomhe.donald@yahoo.com
