Nigeria’s Debt Service Costs Reach $5.47 Billion Amidst Remittance Growth

The Central Bank of Nigeria revealed that the country spent $5.47 billion on foreign debt service from January 2024 to February 2025, increasing fiscal challenges and exerting pressure on external reserves. Foreign exchange remittances grew 1.3% year-on-year to $180.03 million in early 2025, implying some positive impact from recent central bank reforms despite prior concerns of declining remittances.

The Central Bank of Nigeria (CBN) has reported that between January 2024 and February 2025, Nigeria spent approximately $5.47 billion on servicing foreign debt, highlighting an increasing strain on the nation’s revenue streams and its impact on external reserves and fiscal stability. Additionally, foreign exchange direct remittances observed a modest increase of 1.3 percent year-on-year, reaching $180.03 million in early 2025.

In May 2024, debt service peaked at $854.37 million, the highest recorded outflow during this period, while the lowest payment occurred in June 2024 at $50.82 million. The CBN indicated that overall debt service obligations rose by 1.9 percent, with February 2025 obligations reported at $283.22 million in contrast to $276.17 million the previous month.

Debt service for the third quarter of 2024 was recorded at approximately N3.57 trillion, marking a quarter-on-quarter increase of 1.71 percent. The payments showed volatility throughout the reviewed months, with obligations dropping to $215.20 million in April before surging back up in May to $854.37 million. Subsequently, obligations dipped to $50.82 million in June before rising significantly to $542.50 million in July.

In a detailed review, borrowing obligations declined to $279.95 million in August, with a rise observed in September to $515.81 million. The CBN noted steady debt service, reporting a minor increase to $515.86 million in October, before experiencing further fluctuations. Payments in January 2025 increased to $540.67 million before falling to $276.73 million in February.

In connection with remittances, the CBN’s “International Payments” data indicated the total reached $180.03 million in early 2025 compared to $177.7 million in the same period in 2024. Month-on-month figures illustrated a drop to $54.44 million in January 2025, with a notable rebound to $125.59 million in February, reflecting substantial annual growth. Total remittances for 2024 concluded at $1.91 billion, a slight decline from the previous year. Despite concerns over remittance declines, recent figures suggest that CBN reforms might be yielding positive results.

In conclusion, the CBN’s report underscores significant financial challenges due to rising foreign debt service obligations, totaling $5.47 billion within 14 months, while recent fluctuations in direct remittances indicate that reforms may be impacting the economy positively. The varying monthly obligations reflect the pressures on Nigeria’s fiscal and external reserves. Future monitoring will be crucial to assess the long-term effects of these developments on the Nigerian economy.

Original Source: www.arise.tv