Nigeria’s external debt-service payments fell sharply in the first quarter of 2026, largely because the government faced significantly lower principal repayments than a year earlier, although interest costs remained the largest component of its foreign debt obligations.
The country spent $954.06 million servicing external debt between January and March, down 31.5% from the $1.39 billion recorded in the corresponding period of 2025, according to the latest data from the Debt Management Office (DMO).
The Q1 2026 payments comprised $308.33 million in principal repayments, $623.22 million in interest and $22.50 million in other charges.
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The figures show that interest accounted for about 65.3% of Nigeria’s total external debt-service bill during the quarter, underscoring the continuing pressure that debt-financing costs place on government finances.
The decline in the overall payment was driven mainly by a sharp reduction in principal repayments. Nigeria paid $759.58 million in external debt principal in Q1 2025, compared with $308.33 million in the latest quarter.
The difference was even more pronounced when compared with the final quarter of 2025. External debt-service payments fell 47% from $1.80 billion in Q4 2025, when Nigeria made a $1.12 billion Eurobond principal repayment.
This means the latest decline should be viewed largely as a reflection of the timing of debt maturities rather than evidence of a fundamental reduction in Nigeria’s debt burden. Principal repayments can fluctuate substantially between quarters depending on when major bonds and other obligations mature, while interest payments continue to represent a recurring fiscal cost.
Commercial creditors accounted for the largest share of the Q1 external debt-service bill, receiving $501.84 million. Multilateral creditors received $271.90 million, while bilateral creditors accounted for $180.32 million.
Commercial debt servicing was heavily concentrated in interest payments, which reached $476.86 million. The Eurobond portfolio alone accounted for $427.72 million of the interest bill, highlighting the cost of Nigeria’s reliance on international capital markets.
First Abu Dhabi Bank received $68.28 million during the quarter, consisting of $47.72 million in interest and $20.56 million in other charges. Payments to multilateral creditors amounted to $271.90 million, comprising $176.34 million in principal, $95.53 million in interest, and $30,107.78 in other charges.
The International Development Association accounted for $243.42 million of the multilateral payments, including $156.94 million in principal and $86.47 million in interest.
Bilateral debt-service payments were largely concentrated on the Export-Import Bank of China, which received $174.84 million, accounting for almost the entire $180.32 million paid to bilateral creditors during the quarter.
One notable increase came from other charges, which rose to $22.50 million from $3.18 million a year earlier. Although relatively small compared with principal and interest, the increase indicates that the reduction in Nigeria’s external debt-service bill was concentrated primarily in principal repayments.
The latest figures also come against a much broader increase in Nigeria’s debt-service burden.
Total debt service rose to N16.26 trillion in 2025 from N7.79 trillion in 2023, according to the DMO figures cited in the report. Quarterly payments reached a record N4.86 trillion in Q4 2025, up 37.9% from N3.52 trillion in Q3 and 49.9% from N3.24 trillion in Q4 2024.
Economists note that the sharp increase in overall debt service has important implications for Nigeria’s fiscal position because a larger portion of government revenue must be directed toward servicing existing obligations rather than financing infrastructure, social programmes and other public spending.
The composition of the external debt payments is also significant. While multilateral and bilateral loans generally carry more concessional terms than commercial borrowing, Nigeria’s Eurobond obligations continue to generate substantial interest costs. The $427.72 million Eurobond interest payment in Q1 alone represented almost 45% of the country’s entire external debt-service bill for the quarter.
Nigeria’s total public debt stood at N159.35 trillion at March 31, 2026, compared with N159.28 trillion at the end of December 2025. The near-flat quarterly movement in the debt stock suggests that the government did not record a major change in its overall borrowing position during the period, but the size of debt-service obligations remains a central fiscal concern.
“If you do the math, N3.14 trillion in three months is roughly N34 billion every day going to service domestic debt. And this is happening while Nigeria is still borrowing to finance its budget,” Said Nigerian Civic Tech Organization, BudgIT.
“Our 2026 budget analysis projects that the Federal Government will spend N15.81 trillion servicing debt this year. That’s almost half of the money it expects to earn.
“It’s no longer about how much Nigeria owes. It’s what Nigerians are getting for all this borrowing.”
The Nigerian Economic Summit Group has warned that the country remains exposed to debt risks because of weak revenue generation, structural fiscal imbalances and continued reliance on borrowing to finance budget deficits and public spending.
For the government, the immediate relief from the lower Q1 external debt-service bill therefore comes with an important qualification. The reduction was driven mainly by the absence of the large principal maturity that inflated payments in the previous quarters. It does not mean Nigeria’s recurring debt costs have fallen to the same extent.
The key fiscal challenge is the cost of servicing existing debt relative to government revenue. According to economists, sustained improvement will require stronger domestic revenue mobilization, disciplined borrowing, longer debt maturities and greater reliance on lower-cost financing where available.