Nigeria’s external debt climbed sharply to US$51.86 billion by the end of 2025, highlighting the country’s growing reliance on foreign borrowing to finance budget deficits and sustain economic reforms.
According to official data cited by Reuters, the increase from US$45.8 billion in 2024 reflects a combination of new eurobond issuances and syndicated loans secured during the year. The rise underscores how Africa’s most populous nation continues to depend on both domestic and external debt to bridge fiscal gaps amid revenue constraints.
The jump in foreign debt is part of a broader expansion in Nigeria’s overall debt profile. Data from the Debt Management Office shows that the country’s total public debt has been steadily rising, reaching close to $100 billion by mid 2025 when both domestic and external obligations are combined.
External borrowing remains a key component of this strategy. Eurobonds alone account for a significant share of Nigeria’s foreign liabilities, alongside multilateral loans from institutions such as the World Bank and bilateral creditors including China.
The latest increase is largely tied to the government’s need to finance persistent budget deficits. Nigeria’s fiscal plans continue to project significant shortfalls between revenue and expenditure, forcing authorities to turn to borrowing as a primary funding tool.
While borrowing provides immediate liquidity, it comes with long term costs. Debt servicing is already consuming a substantial portion of government revenue. In 2025, Nigeria spent billions of dollars on external debt repayments alone, with figures showing that nearly 70% of its foreign payments in the first eight months of the year went toward servicing debt obligations.
This creates a structural challenge. Even though Nigeria’s debt to GDP ratio remains relatively moderate compared to some peers, its revenue base is weak. Analysts consistently point out that the real issue is not just how much the country owes, but how little it earns relative to its obligations.
The government has defended its borrowing strategy as necessary to support economic reforms and infrastructure development. Recent policy changes, including fuel subsidy removal and exchange rate liberalisation, have been aimed at improving fiscal stability and attracting foreign investment.
There are signs that these reforms are beginning to yield results. Nigeria saw a significant surge in capital inflows in 2025, with foreign investors drawn to high returns in the country’s financial markets. However, much of this investment is short term, raising concerns about vulnerability to global financial shocks.
At the same time, external conditions are adding pressure. Rising global interest rates and geopolitical tensions, particularly in energy markets, have increased borrowing costs and tightened access to international capital. This makes new debt more expensive and refinancing existing obligations more challenging.
The composition of Nigeria’s debt also matters. A large portion of external borrowing is denominated in foreign currencies, exposing the country to exchange rate risks. With the naira experiencing volatility in recent years, the cost of servicing dollar denominated debt can rise sharply when the local currency weakens.
Despite these risks, borrowing is likely to remain central to Nigeria’s fiscal strategy in the near term. The government continues to pursue infrastructure projects, social spending and economic reforms that require significant funding, while revenue mobilisation efforts are still catching up.
The key question is sustainability. If borrowing continues to outpace revenue growth, debt servicing could crowd out essential spending on health, education and infrastructure. On the other hand, if reforms succeed in boosting growth and expanding the tax base, the current debt levels could become more manageable over time.
For now, the rise in foreign debt to nearly $52 billion reflects a balancing act. Nigeria is trying to fund development and stabilise its economy while managing the risks that come with increasing reliance on external financing.
The numbers show progress in some areas, but they also highlight a persistent vulnerability. The country is not just borrowing more, it is entering a phase where how that debt is managed will determine the pace and stability of its economic future.
