As of April 30, 2025, Nigeria’s debt to the International Monetary Fund (IMF) remains substantial, with the country expected to pay SDR22.35 million in charges and interest for the year 2025. The total outstanding charges and interest owed to the IMF amounts to SDR125.99 million, which, based on the current exchange rate of N2,180 per Special Drawing Right (SDR), is equivalent to approximately N274.66 billion.

The IMF debt, which has accumulated over the past few years, traces back to April 2020, when Nigeria secured a loan of SDR2.454 billion. This loan agreement has led to periodic payments, both in the form of principal repayments and interest charges. According to the latest figures from the IMF, Nigeria’s debt servicing obligations are scheduled to increase slightly in the coming years. The country’s liabilities are expected to remain steady at SDR25.91 million in 2026 and 2027, before increasing marginally to SDR25.92 million in 2028 and dipping slightly to SDR25.90 million in 2029.

The Role of the Naira’s Depreciation in Amplifying Debt Burden

The sharp depreciation of Nigeria’s currency, the Naira, throughout 2024 has significantly escalated the cost of servicing this debt in local currency terms. Data from the Central Bank of Nigeria (CBN) reveals that the country’s debt burden to the IMF ballooned from N2.5 trillion in 2023 to N5 trillion by the close of 2024 due to the Naira’s severe depreciation. This situation has meant that Nigeria now has to allocate double the local currency amount to meet its external debt obligations, a stark contrast to previous years when the exchange rate was more stable.

The growing burden of debt servicing has raised concerns about the sustainability of Nigeria’s finances. The increased expenditure on foreign debt payments has meant that the country is required to devote more public funds to cover its international commitments. This reallocation of resources has in turn constrained funding for other essential sectors, including infrastructure and social services.

IMF Debt Repayments: Breakdown of Charges and Principal Payments

Nigeria’s debt repayments to the IMF consist of two components: the principal amount and the associated charges or interest. The repayment of the principal started in 2023, with the country meeting its obligations by paying SDR613.63 million that year. In 2024, Nigeria made a larger repayment of SDR1.227 billion, with an additional SDR613.63 million scheduled for 2025.

Before the commencement of principal repayments, Nigeria had only paid charges and interest, with amounts totaling SDR13.22 million in 2020, SDR25.88 million in 2021, and SDR25.89 million in 2022. The debt servicing figures provided by the IMF show that while the principal payments are being met, the outstanding charges and interest continue to accumulate, with SDR125.99 million still owed as of April 2025.

Government Claims vs. Reality: The Debt Repayment Debate

Despite the clear data from the IMF, which shows that Nigeria continues to owe significant charges and interest on its IMF loan, there has been some discrepancy between official statements and the reality on the ground. Government officials, including presidential aides Bayo Onanuga and Dada Olusegun, have publicly claimed that Nigeria has cleared its debts to the IMF. However, this claim does not align with the IMF’s current records, which indicate that the country still has substantial overdue obligations in the form of interest and charges.

SaharaReporters, citing the CBN’s 2024 financial year report, has questioned these assertions, pointing out that while Nigeria has met its scheduled principal repayments, the ongoing interest payments remain a significant financial burden. Moreover, the weakening value of the Naira means that the country is paying more in local currency to service its debt obligations than would have been required if the Naira had retained its previous value.

Debt Servicing’s Impact on Nigeria’s Economy

The mounting cost of debt servicing has become a key issue in Nigeria’s broader economic challenges. A review of Nigeria’s financial report for January 2025 revealed that the country spent a staggering N696 billion on debt servicing in that month alone. Over a two-month period, between December 2024 and January 2025, the total expenditure on debt servicing amounted to N1.3 trillion—well above the government’s budgeted monthly figure of N689 billion.

The persistent drain on Nigeria’s fiscal resources has had significant implications for other areas of government spending. The CBN’s economic report highlighted that in January 2025, there was no allocation for capital expenditure, underscoring the strain on the government’s budget due to its debt servicing commitments.

A Long-Term Challenge: Implications for Future Growth

The increasing burden of IMF debt servicing and the impact of the Naira’s depreciation have raised concerns about Nigeria’s long-term economic stability. While the country has managed to meet its principal repayments so far, the ongoing costs associated with interest payments will continue to strain Nigeria’s finances in the coming years. The government’s ability to balance debt servicing with investments in critical sectors such as infrastructure, education, and healthcare will be key to ensuring sustainable economic growth.

Additionally, Nigeria’s reliance on foreign loans and the vulnerability of the Naira to external shocks highlight the need for greater diversification of the country’s revenue sources. Strengthening domestic revenue generation, improving fiscal discipline, and reducing the country’s dependency on foreign debt will be essential for achieving long-term economic resilience.

Conclusion: Nigeria’s Path Forward

As Nigeria grapples with the challenges of servicing its IMF debt, the government will need to take careful steps to manage its financial obligations while also addressing the needs of its growing population. Ensuring fiscal responsibility, improving local revenue generation, and strengthening the value of the Naira will be crucial to mitigating the impact of foreign debt servicing on the country’s overall economic health. The situation remains fluid, and careful management will be required to navigate the long-term consequences of the IMF loan.