Nigeria’s Foreign Debt Service Cost Slides to $278m
Debt services on foreign borrowings declined by 2.3% in 12 months to about $278 million as of February, 2025, analysts said in a commentary note, citing data from the Central Bank.
The total amount of foreign payments made by the Central Bank of Nigeria (CBN) accelerated by more than 17% in 12 months, primarily driven by debt service costs, and letter of credits among others.
As of February 2025, international payments increased by 17.2% year on year to USD497.91 million in February from USD424.96 million amidst sequence of external borrowings. This was driven by higher direct remittance payments which accounted for 25.2% of the total international transactions, according to Cordros Capital Limited.
The record showed a decline in debt service, accounting for 55.6% of the total international transactions while letters of credit accounted for 19.2% of all the payments made. Precisely, direct remittance payments rose by 220.8% year on year to USD125.58 million as of February 2025 from USD39.15 million in the comparable period in 2024.
Cordros Capital Limited said this was influenced by higher diaspora remittances. On the other hand, debt service payments declined by 2.3% year on year to USD276.73 million in 12 month from USD283.22 million in February 2024.
The CBN payments for letters of credit dropped by 6.8% year on year to USD95.59 million from USD102.60 million, partly reflecting lower imports amid weaker consumer demand.
On a month-on-month basis, international payments facilitated by CBN declined by 24.5% relative to the USD630.64 million recorded in January. “We expect international payments to remain elevated, primarily due to FG’s debt repayment and servicing obligations”, Cordros Capital Limited said in its commentary note.
Additionally, analysts said they expect the improvement in foreign exchange liquidity to strengthen consumer demand, leading to a gradual increase in imports of goods and services, which will support the growth in payments of letters of credit and direct remittances. #Nigeria’s Foreign Debt Service Cost Slides to $278m Reps to Intervene Over Electricity Bill Hike at University of Jos
