Nigeria’s External Debt Jumps To $145 Billion, World Bank Reacts

Nigeria’s external debt has climbed to $145.02 billion, while the country is also facing rising costs of servicing its foreign loans, as confirmed in a recent report by the World Bank.

The report showed that the country’s external debt increased by 6.6 per cent in 2025, bringing fresh attention to Nigeria’s growing financial obligations to foreign lenders.

The figures were contained in the World Bank’s International Debt Report 2026, released on Thursday, November 5, Naija News reports.

According to the report, Nigeria’s external debt has increased from $83.21 billion in 2015 to $145.02 billion in 2025, representing an increase of about $61.8 billion in 10 years.

The report, which examined the external debt positions of low- and middle-income countries as of December 2025, put Nigeria’s total external debt at $145.015 billion.

A breakdown showed that $62.4 billion was public and publicly guaranteed debt, while $54.476 billion belonged to private borrowers without government guarantees.

Another $28.139 billion represented short-term external debt obligations.

The figures mean that government borrowing and loans guaranteed by the government account for less than half of Nigeria’s total external debt, with private sector and short-term obligations making up the remaining portion.

The World Bank explained that public and publicly guaranteed debt covers loans owed by the Federal Government, public institutions and state-owned companies, as well as private sector loans backed by government guarantees.

Private nonguaranteed debt, on the other hand, refers to long-term foreign loans obtained by private businesses without government backing.

The report also explained that external debt covers money owed by individuals, businesses and institutions in a country to lenders outside its borders, regardless of the currency involved.

Beyond the rising debt figures, the World Bank raised concerns over the growing amount of money Nigeria is spending to repay its foreign loans.

The report showed that Nigeria’s external debt-to-exports ratio stood at 212 per cent in 2025, while its external debt-to-gross national income (GNI) ratio was 51 per cent.

The country’s debt-service-to-exports ratio was 19 per cent, while debt servicing as a percentage of GNI stood at five per cent.

Although the external debt-to-exports and debt-to-GNI ratios declined by 4.3 per cent and 6.6 per cent respectively compared with 2024, the cost of servicing the debt moved in the opposite direction.

The debt-service-to-exports ratio increased by 9.6 per cent, while debt servicing relative to GNI rose by 6.9 per cent.

This suggests that while Nigeria’s external debt became slightly lower relative to its national income and export earnings, the pressure of repaying the loans increased.

The World Bank also reported that debt servicing by low- and middle-income countries increased for the fifth consecutive year, reaching $1.4 trillion in 2025.

Payments rose by 1.9 per cent during the year, largely due to obligations to private lenders, particularly international bondholders.

Between 2022 and 2025, the countries covered by the report paid about $436.1 billion more in debt servicing than they received in fresh financing.

However, the trend changed in 2025, when long-term debt flows recorded a net inflow of $45.4 billion, compared with a net outflow of $118.4 billion in 2024.

In the report’s foreword, the World Bank’s Chief Statistician, Haishan Fu, described the situation as a worrying development in which developing countries were getting more access to foreign loans but paying increasingly high costs to secure them.

He said many countries were borrowing more and spending more on repayments, leaving them with fewer resources for long-term development.

Fu warned that rising debt payments were taking money away from important sectors such as infrastructure, job creation, education and healthcare.

He called on developing countries to focus on securing affordable, transparent and sustainable financing instead of simply increasing their borrowing.

The report also highlighted Nigeria’s return to the international bond market in 2025, when the country raised $2.3 billion through a two-part sovereign bond issuance.

According to the World Bank, Nigeria was the third-largest issuer among Sub-Saharan African countries eligible for International Development Association (IDA) financing during the year.

The $2.3 billion borrowing was raised through two bonds.

The first was a 10-year bond carrying an interest rate of 8.625 per cent, while the second was a 20-year bond with an interest rate of 9.125 per cent.

The World Bank noted that although developing countries returned to international bond markets in 2025, borrowing costs remained high, particularly for countries with weaker credit ratings.

Across IDA-eligible countries, the average interest rate on new loans from private creditors increased to 8.2 per cent in 2025, the highest level since the late 1980s.

By comparison, the average interest rate on new loans from official creditors remained at 2.7 per cent between 2024 and 2025.

The difference between the two interest rates widened to 5.5 percentage points in 2025, compared with 3.4 percentage points in 2016.

For Nigeria, the report put the average interest rate on new official external debt commitments at 1.9 per cent, while private creditors charged an average of 9.6 per cent.

It also showed that Nigeria’s new official loans had an average repayment period of 25 years, with a five-year grace period.

Loans from private creditors, however, had an average maturity of 12 years and an eight-year grace period.

The figures highlight the difference between borrowing from official lenders, such as international development institutions, and obtaining loans from private investors and financial markets.

World Bank Reveals Nigeria’s $5bn Financing Deal

Another major issue raised in the report was Nigeria’s use of a financing arrangement known as a Total Return Swap (TRS).

The World Bank identified Nigeria, Angola, Argentina, Colombia and Senegal among countries that had entered into such arrangements since 2024.

A Total Return Swap allows a government to obtain foreign currency by using government securities or other assets as collateral.

According to the report, Nigeria entered into a $5 billion TRS transaction in 2026, with a three-year maturity period and a collateralisation ratio of about 133 per cent.

This means Nigeria provided securities worth approximately $6.7 billion as collateral for the $5 billion financing.

The World Bank explained that such arrangements could help governments access foreign currency quickly and, in some cases, at lower short-term costs than conventional borrowing.

However, it warned that the deals also carry risks, including possible demands for additional collateral, refinancing difficulties and concerns over transparency.

The report raised questions about whether the full financial obligations of countries using such arrangements were being properly captured in their official debt figures.

It explained that where a government receives money upfront and is required to repay it, the arrangement should be recognised as debt, even if it involves financial derivatives.

The World Bank therefore advised governments to provide clear information about the amount borrowed, repayment period, collateral used, margin requirements and other repayment conditions.

It warned that failure to disclose these details could make it difficult for citizens, investors and financial institutions to understand the full extent of a country’s financial obligations.