Nigeria's total external debt stock reached $42.47 billion as of March 31, 2026, according to the Debt Management Office (DMO). The figure represents a marginal increase from $42.12 billion recorded at the end of 2025, reflecting continued borrowing to finance infrastructure and budget deficits.
The debt is distributed among multilateral creditors, bilateral lenders, and commercial sources. The World Bank Group remains the largest single creditor, holding $16.98 billion, which accounts for approximately 40% of the total external debt. China's Exim Bank follows with $4.83 billion, while Eurobonds constitute $15.12 billion, making them the largest component of commercial debt.
Breakdown of Major Creditors
According to the DMO, the World Bank's exposure includes loans from the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD). IDA loans, which are concessional, amount to $13.91 billion, while IBRD loans stand at $3.07 billion. These facilities are largely directed at poverty reduction, health, education, and infrastructure projects across the country.
China's Exim Bank provides $4.83 billion in bilateral loans, primarily funding railway projects such as the Abuja-Kaduna rail line and the Lagos-Ibadan rail modernisation. Other bilateral creditors include France, Germany, and Japan, though their exposures are smaller compared to China.
Commercial Debt and Eurobonds
Eurobonds are Nigeria's largest single debt instrument, with a total outstanding of $15.12 billion. The country has issued several Eurobond tranches since 2011, with maturities ranging from 2027 to 2051. The most recent issuance was in 2025, when Nigeria raised $2.2 billion in dual-tranche bonds to refinance existing obligations and support the 2025 budget.
Commercial debt also includes $4.53 billion in Diaspora bonds and $1.98 billion in syndicated loans from international banks. These instruments carry higher interest rates compared to concessional loans, increasing the cost of debt service.
Debt Service and Fiscal Pressure
Debt service payments on external debt consumed $3.46 billion in 2025, representing about 9% of total government revenue. The DMO projects that debt service will rise to $4.1 billion in 2026 due to higher interest rates and the depreciation of the naira, which increases the local currency cost of dollar-denominated debt.
According to a report by the International Monetary Fund (IMF), Nigeria's external debt-to-GDP ratio stood at 11.2% as of end-2025, which is moderate by international standards. However, the ratio of external debt service to exports is higher, at 14.8%, raising concerns about liquidity constraints.
Implications for the Economy
The concentration of debt in commercial instruments exposes Nigeria to currency and interest rate risks. The naira depreciated by 23% in 2025, increasing the naira value of external debt. This has exacerbated fiscal pressure, as the government allocated a significant portion of its budget to debt servicing.
In response, the government has initiated discussions with creditors for debt restructuring, but no formal agreement has been reached. The DMO plans to shift towards more concessional borrowing, targeting $2.5 billion in new loans from the World Bank and African Development Bank in 2026.
The rising external debt service also impacts public investment, as funds that could be used for infrastructure and social programmes are diverted to debt repayment. The government has announced plans to increase non-oil revenue and improve tax collection to reduce reliance on borrowing.
As of the first quarter of 2026, Nigeria's external debt service obligations for the year are estimated at $4.1 billion, with the first major payment due in June. The government is expected to draw down on existing facilities and seek new financing to meet these obligations.
