Nigeria’s external debt stock rose to $145.02bn at the end of 2025, representing a 6.6 per cent increase from the previous year, as the World Bank warned that rising borrowing costs and debt-service obligations are putting increasing pressure on developing economies.
The figure is contained in the World Bank’s International Debt Report 2026, released on Thursday. It shows that Nigeria’s external debt has increased by approximately $61.8bn over the past decade, from $83.21bn recorded in 2015.
According to the report, Nigeria’s total external debt stood at $145.015bn as of December 2025, comprising $62.4bn in public and publicly guaranteed debt, $54.476bn in private nonguaranteed debt and $28.139bn in short-term obligations.
The breakdown indicates that government and government-guaranteed borrowing accounts for less than half of the country’s external debt, while private sector borrowing without government guarantees and short-term liabilities constitute the remainder.
The World Bank defines public and publicly guaranteed debt as external obligations owed by government institutions and public entities, including private sector borrowing backed by government guarantees. Private nonguaranteed debt, on the other hand, refers to loans obtained by private borrowers without government backing.
The World Bank warned that developing countries were increasingly borrowing at higher costs while spending more on debt repayment, leaving fewer resources for critical development projects.
The bank’s official, Fu, said rising debt-service obligations were limiting the funds available for infrastructure, employment, education, healthcare and other development priorities.
He stressed that the focus should not be on increasing borrowing but on securing affordable, transparent and sustainable financing capable of supporting investment and economic growth.
Nigeria’s return to the international bond market in 2025 was also highlighted in the report.
The country raised $2.3bn through a dual-tranche sovereign bond issuance, making it the third-largest issuer among Sub-Saharan African countries eligible for financing from the International Development Association.
The bond issuance comprised a 10-year instrument with an interest rate of 8.625 per cent and a 20-year bond carrying an interest rate of 9.125 per cent.
The World Bank noted that developing economies returned to international bond markets in 2025 despite elevated borrowing costs, particularly for countries with weaker credit ratings.
Across IDA-eligible countries, the average interest rate on new commitments from private creditors rose to 8.2 per cent in 2025, the highest level since the late 1980s.
By comparison, the average interest rate on new official creditor commitments remained at 2.7 per cent between 2024 and 2025.
The gap between private and official borrowing costs consequently 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, against 9.6 per cent for private creditors.
It further showed that Nigeria’s new official borrowing commitments had an average maturity of 25 years and a five-year grace period, while private creditor commitments had an average maturity of 12 years and an eight-year grace period.
The figures underscore the significantly higher interest costs associated with Nigeria’s borrowing from private international lenders.
The report also highlighted Nigeria’s use of a Total Return Swap (TRS), a financial arrangement that enables borrowers to access foreign currency liquidity using government securities or other assets as collateral.
Nigeria was listed alongside Angola, Argentina, Colombia and Senegal among countries that had entered into such arrangements since 2024.
According to the report, Nigeria entered into a $5bn Total Return Swap transaction in 2026, with a three-year maturity and a collateralisation ratio of approximately 133 per cent.
This means the country pledged domestic securities worth about $6.7bn as collateral to secure the financing.
Although the arrangement can provide governments with quick access to foreign currency and potentially reduce short-term financing costs, the World Bank cautioned against risks associated with collateral requirements, margin calls, refinancing and inadequate transparency.
It urged governments to disclose the amounts borrowed, maturity periods, collateral values, margin requirements and repayment obligations attached to such transactions.
The bank warned that insufficient disclosure could make it difficult for investors and the public to establish the full extent of a country’s financial exposure.
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