Nigeria’s external debt service falls 31.5% to $954m in Q1

Nigeria’s external debt service fell by 31.5 per cent to $954.06 million in the first quarter of 2026, providing some relief to the Federal Government’s foreign debt burden despite continued pressure from interest payments.

The latest figures from the Debt Management Office (DMO) showed that the amount spent on servicing external obligations in the first quarter was $437.44 million lower than the $1.39 billion recorded in the corresponding period of 2025.

The decline was driven largely by a sharp reduction in principal repayments, which fell from $759.58 million in Q1 2025 to $308.33 million in Q1 2026.

However, interest payments remained the largest component of the government’s external debt service, rising in significance as Nigeria continued to meet obligations to commercial, multilateral and bilateral creditors.

The DMO data showed that Nigeria paid $623.22 million in interest during the quarter, alongside $308.33 million in principal repayments and $22.50 million in other charges.

The Q1 2026 figure also represented a 47 per cent decline from the $1.80 billion spent on external debt service in the fourth quarter of 2025.

The sharp quarterly reduction was largely attributed to the absence of the $1.12 billion Eurobond principal repayment that significantly increased Nigeria’s external debt service in Q4 2025.

Commercial creditors received the largest share of Nigeria’s external debt service during the first quarter, accounting for $501.84 million, followed by multilateral creditors with $271.90 million and bilateral creditors with $180.32 million.

Of the payments to commercial creditors, interest accounted for $476.86 million, with the Eurobond alone accounting for $427.72 million.

First Abu Dhabi Bank also received $47.72 million in interest, in addition to $20.56 million in other charges, bringing total payments to the bank to $68.28 million during the quarter.

Payments to multilateral creditors comprised $176.34 million in principal, $95.53 million in interest and about $30,108 in other charges.

The International Development Association accounted for $243.42 million of the multilateral payments, comprising $156.94 million in principal and $86.47 million in interest.

Bilateral creditors received $180.32 million, with the Export-Import Bank of China accounting for $174.84 million, underscoring the concentration of Nigeria’s bilateral external debt service among a few major creditors.

Other charges, excluding interest, increased sharply from $3.18 million in Q1 2025 to $22.50 million in the first quarter of 2026.

Despite the decline in external debt service during the quarter, Nigeria’s broader debt burden remains substantial, with total public debt standing at N159.35 trillion as of March 31, 2026.

The figure was marginally higher than the N159.28 trillion recorded at the end of December 2025, indicating that the overall debt stock remained broadly stable during the first quarter.

Debt service has, however, become an increasingly significant pressure on government finances. Total debt service rose to N16.26 trillion in 2025 from N7.79 trillion in 2023, reflecting the growing cost of servicing both domestic and external obligations.

Quarterly debt service reached a record N4.86 trillion in the fourth quarter of 2025, representing a 37.86 per cent increase from N3.52 trillion in Q3 2025 and 49.93 per cent above the N3.24 trillion recorded in Q4 2024.

The rising cost of debt servicing has heightened concerns over the government’s fiscal space, particularly as Nigeria continues to rely on borrowing to finance budget deficits and sustain public expenditure.

The Nigerian Economic Summit Group has warned that the country remains exposed to significant debt risks despite improvements in some fiscal indicators, citing weak revenue generation, structural economic imbalances and continued dependence on borrowing.

The latest DMO figures suggest that while the government’s external debt service obligations eased significantly in the first quarter, interest payments continue to account for the bulk of foreign debt servicing costs, leaving revenue mobilisation and debt management central to Nigeria’s fiscal sustainability.