Nigeria’s external debt hits $145bn as servicing burden worsens

Nigeria’s external debt stock surged to $145.02 billion at the end of 2025, representing a 6.6 per cent increase from the previous year.

The World Bank’s International Debt Report 2026 revealed that the total debt comprises $62.4 billion in public and publicly guaranteed obligations, $54.476 billion in private nonguaranteed borrowing, and $28.139 billion in short-term liabilities.

The World Bank warned that rising debt-service obligations are absorbing resources needed for national development priorities.

Although Nigeria’s external debt relative to national income and export earnings improved marginally, the burden of servicing these obligations escalated during the year. The nation’s debt-service-to-exports ratio climbed by 9.6 per cent, while debt service relative to Gross National Income (GNI) rose by 6.9 per cent.

World Bank Chief Statistician, Haishan Fu, described the situation across developing economies as a troubling paradox where nations gain access to international financing but pay far more to secure it.

“Low- and middle-income countries are borrowing more, paying more, and, in many cases, leaving less for long-term development,” Fu stated.

He warned that the objective should focus on better financing that is affordable, transparent, and sustainable, rather than acquiring more debt.

The report also detailed Nigeria’s return to the international bond market in 2025, where the Federal Government raised $2.3 billion through a dual-tranche sovereign bond issuance.

The transaction included a 10-year bond with an 8.625 per cent interest rate and a 20-year bond at 9.125 per cent.

The World Bank also revealed that the interest rates illustrate the high cost of securing foreign funds. The average interest rate for Nigeria on new official external debt commitments was 1.9 per cent, compared to a 9.6 per cent from private creditors.

The report identified Nigeria among countries utilising a Total Return Swap (TRS) financing arrangement. The country entered into a $5 billion TRS transaction in 2026, pledging domestic securities worth approximately $6.7 billion as collateral.

While this arrangement provides quick foreign currency liquidity, the global financial institution warned that it carries serious margin-call, refinancing, and transparency risks.

The World Bank advised governments to fully disclose all obligations associated with such transactions to establish the true extent of financial exposure.