Nigeria’s Foreign Reserves Dip by $2.57bn in Q1 2025 Amid Mounting Debt Servicing Costs

Nigeria’s gross foreign exchange reserves recorded a significant decline of $2.57 billion in the first quarter of 2025, representing a 6.29% decrease over the three-month period, according to data released by the Central Bank of Nigeria (CBN).

Figures available on the CBN’s official website show that the country’s FX reserves, which stood at approximately $40.88 billion on January 2, 2025, fell to $38.31 billion by the end of March. This steady erosion in reserves has been attributed largely to the burden of foreign debt servicing obligations.

In a statement earlier this week, the CBN acknowledged the pressure exerted by external debt repayments, particularly in January and February, when the country spent a combined $816 million servicing foreign-denominated debt.

Of this figure, $540 million was paid in January alone — a month marked by scheduled repayments that significantly impacted reserve levels.

“The first quarter figures reflected some seasonal and transitional adjustments, including significant interest payments on foreign-denominated debt,” the CBN said.

“However, the underlying fundamentals remain intact, and reserves are expected to continue improving over the second quarter of this year.”

January 2025: Reserves dropped from $40.88 billion to $39.72 billion — a decline of $1.16 billion or 2.84%.

February 2025: A further drop to $38.42 billion marked a $1.3 billion decrease (3.27%).

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March 2025: Reserves dipped again, albeit marginally, to $38.31 billion, shedding another $110 million (0.29%).

The apex bank emphasized that while the quarter’s figures reflect a downturn, they were expected due to scheduled debt servicing and seasonal external payment pressures.

The bank noted that foreign debt obligations have become a consistent drag on the reserves despite improvements witnessed at the end of 2024.

Despite the Q1 decline, the CBN remains optimistic about a rebound in reserve levels as macroeconomic fundamentals show signs of strengthening. Improved oil production, coupled with an expected rise in non-oil foreign exchange earnings, is projected to stabilize and eventually increase reserve holdings.

“Going forward, the CBN anticipates a steady uptick in reserves,” the bank noted, “underpinned by improved oil production levels and a more supportive export growth environment expected to boost non-oil FX earnings and diversify external inflows.”

The central bank reiterated its commitment to prudent reserve management, transparent fiscal reporting, and a macroeconomic framework focused on stabilizing the naira, attracting foreign investment, and enhancing Nigeria’s long-term economic resilience.