Manageable external debt service

Payments to external creditors in the market have risen steeply in line with the FGN’s commercial borrowings (Eurobonds and the small diaspora issue). They soared in 2018 (see chart) because of the repayment on maturity of the US$500m 5.125% Eurobond in July although we should note that the next maturity falls in 2021. Debt service payments to non-market creditors, multilateral and bilateral, have increased more steadily.


  • Domestic debt service, in contrast, has stabilized. Indeed payments in Q4 2018 were a little lower y/y (Good Morning Nigeria, 25 April 2019) due to a combination of falling rates and the FGN/DMO policy of externalization. .
  • Based upon annual interest and fee payments in 2018, and the mid-year stock of debt, we estimate the average borrowing cost from the World Bank’s International Development Association at 0.9%, the African Development Bank at 1.4% and Exim Bank of China at 2.8%.
  • The IMF offers a sustainability analysis for external debt, public and private combined, in its latest Article IV consultation. It puts this stock of debt at 16% of GDP in 2018 whereas the DMO data has FGN obligations alone at 6%.


External debt service (FGN and states; US$ millions)

Sources: Debt Management Office (DMO); FBNQuest Capital Research


  • Its baseline scenario has external debt/exports rising from 96.7% in 2018 to 142.5% in 2024 on the conservative basis of annual GDP growth under 3%, very limited export growth and external interest rates a little over 5%.

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