Nigeria spent nearly $1bn servicing its foreign loans in the first two months of 2026, as external debt repayments rose amid increasing capital outflows from the economy.
The figure, obtained from the Central Bank of Nigeria’s February 2026 Economic Report, showed that the country spent $440m on foreign loan repayments in January and $480m in February, bringing the total debt servicing bill for the two months to $920m.
The report showed that total capital outflows rose significantly in February, driven largely by higher capital transfers and increased loan repayments. According to the CBN, “Capital outflows increased, mainly on account of higher capital transfers in the review period. Total capital outflow rose to $2.75bn, from $1.63bn in the preceding month.”
The apex bank attributed the increase primarily to a sharp rise in capital transfers, although debt repayments also contributed to the higher outflows. It stated, “The development was driven mainly by a 91.53 per cent increase in capital transfers to $2.26bn, relative to the level in the preceding month. Outflow through loan repayments also rose to $0.48bn from $0.44bn in January 2026.”
The report added that dividend repatriation declined during the review period. “In terms of share, capital transfers accounted for 82.18 per cent of total capital outflows, loan repayments (17.45 per cent), while repatriation of dividends constituted the balance,” the CBN noted.
An analysis of the figures showed that debt repayments accounted for nearly one-fifth of Nigeria’s total capital outflows in February, highlighting the growing burden of servicing the country’s external obligations.
The report also indicated that the banking sector accounted for the largest share of capital outflows at 45.96 per cent, followed by the financing sector at 26.10 per cent, oil and gas at 15.72 per cent, telecommunications at 3.51 per cent, and production/manufacturing at 2.62 per cent, while other sectors made up the balance.
It also showed that Lagos accounted for 62.90 per cent of capital outflows, followed by the Federal Capital Territory at 37.04 per cent, with Ondo, Ogun and other states accounting for the remainder.
Despite the increase in capital outflows, the CBN said Nigeria’s external position remained strong during the period. In its summary of economic developments, the bank stated that “despite heightened geopolitical risks and trade tensions, the external sector recorded a higher trade surplus and capital inflows, due largely to lower import bills and increased capital transfers.”
It added that foreign reserves rose to $50.12bn in February from $48.88bn in January, providing import cover of 9.61 months, well above the international benchmark of three months.
An earlier report showed that Nigeria spent about $5.21bn servicing external debt obligations in 2025, accounting for more than 72 per cent of the country’s total international payments during the year, according to the data obtained from the Central Bank of Nigeria.
Figures published on the CBN website indicated that external debt service rose from $4.66bn in 2024 to $5.21bn in 2025, representing an increase of $551.86m or about 11.9 per cent year-on-year.
Nigeria’s public external debt is projected to rise by $20.7bn by 2027, according to the International Monetary Fund. The IMF disclosed this in its 2026 Article IV Consultation report on Nigeria, projecting that public external debt would increase from $51.9bn in 2025 to $72.6bn by 2027.
The projected increase represents a 39.9 per cent rise within two years and underscores growing concerns over the country’s debt burden despite recent improvements in macroeconomic stability.
According to the Fund’s Balance of Payments projections, public external debt is expected to rise from $51.9bn in 2025 to $66.5bn in 2026 before climbing further to $72.6bn in 2027.
The IMF’s projection broadly aligns with the latest Debt Management Office data, which showed that Nigeria’s public external debt stood at $51.86bn as of December 31, 2025. Based on the Fund’s forecast, the debt stock would increase by about $20.74bn between the end of 2025 and 2027.
Public external debt service due is expected to increase from 8.1 per cent of exports of goods and services in 2025 to 8.8 per cent in 2027, after easing to 5.0 per cent in 2026. The Fund further projected that interest payments on public debt would rise from $2bn in 2025 to $3bn by 2027.
At the Federal Government level, debt servicing is expected to continue consuming more than half of government revenue. The IMF estimated that interest payments absorbed 53.2 per cent of Federal Government revenue in 2025 and projected the ratio at 53.7 per cent in 2026 before easing marginally to 52.4 per cent in 2027.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, earlier faulted Nigerians, especially analysts and commentators, for criticising government borrowing without considering the purpose, cost and expected returns of such debt.
Oyedele spoke in Abuja at the Fellowship Award Ceremony and 2nd Biennial Conference of the Capital Market Academics of Nigeria. He said, “When analysts go on TV and join the populist view to accuse the government of borrowing, you are doing a disservice. The relevant question is never simply how much debt.
“It is always debt for what and at what cost, against what return, and repaid on what terms. A nation, a state, or a business that borrows to finance a productive asset generating returns above the cost of that capital is not behaving recklessly; it is behaving rationally.”