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-servicing obligations could undermine the country’s development priorities.

The figure is contained in the World Bank’s International Debt Report 2026, released on Thursday, which showed that Nigeria’s external debt had increased from $83.21bn in 2015 to $145.02bn in 2025, representing an additional $61.8bn over the decade.

According to the report, Nigeria’s external debt comprises $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 account for less than half of the country’s external debt, while private sector borrowing and short-term obligations constitute a substantial proportion.

The World Bank also raised concerns over the increasing pressure of debt servicing on developing economies, noting that Nigeria recorded a deterioration in some of its debt-service indicators in 2025.

It put Nigeria’s external debt-to-exports ratio at 212 per cent, while the debt-to-gross national income (GNI) ratio stood at 51 per cent.

Similarly, the country’s debt-service-to-exports ratio was 19 per cent, while debt service relative to GNI stood at five per cent.

Although the debt-to-exports and debt-to-GNI ratios declined by 4.3 per cent and 6.6 per cent respectively compared with their 2024 levels, debt service relative to exports increased by 9.6 per cent, while debt service relative to GNI rose by 6.9 per cent.

The report noted that debt-service payments among low- and middle-income countries increased for the fifth consecutive year, reaching $1.4tn in 2025.

In its assessment, the World Bank’s Chief Statistician, Haishan Fu, described the situation as a troubling paradox in which developing economies were gaining access to international financing but paying increasingly higher costs.

“Low- and middle-income countries are borrowing more, paying more, and, in many cases, leaving less for long-term development,” Fu said.

He warned that rising debt-service obligations were consuming resources that should otherwise be invested in infrastructure, employment, education, healthcare and other development priorities.

According to him, the priority should not be increased borrowing but access to affordable, transparent and sustainable financing capable of supporting investment and economic growth.

The report also highlighted Nigeria’s return to the international bond market in 2025, when the country raised $2.3bn through a dual-tranche sovereign bond issuance.

The issuance comprised a 10-year bond carrying an interest rate of 8.625 per cent and a 20-year bond with an interest rate of 9.125 per cent.

Nigeria was ranked the third-largest issuer among Sub-Saharan African countries eligible for International Development Association financing during the year.

The World Bank further noted that borrowing from private international creditors had become significantly more expensive for developing economies.

It disclosed that Nigeria’s average interest rate on new official external debt commitments in 2025 was 1.9 per cent, compared with 9.6 per cent for private creditors.

While official borrowing had an average maturity of 25 years and a five-year grace period, private creditor commitments had an average maturity of 12 years and an eight-year grace period.

Another issue highlighted in the report was Nigeria’s use of a $5bn Total Return Swap (TRS) financing arrangement in 2026, with a three-year maturity and a collateralisation ratio of approximately 133 per cent.

Under the arrangement, Nigeria reportedly pledged domestic securities worth about $6.7bn as collateral for the $5bn financing.

The World Bank explained that such arrangements could provide governments with quick access to foreign currency and potentially lower short-term financing costs than conventional borrowing.

However, it warned that they also carried significant risks, including collateral exposure, margin calls, refinancing challenges and inadequate transparency.

The bank stressed the need for governments to disclose details of such transactions, including the amounts borrowed, maturity periods, collateral requirements and repayment obligations, to ensure that the full extent of their financial exposure was properly understood.

Nigeria’s rising external debt forms part of a broader increase in borrowing among developing economies, with several African countries also recording significant increases in their debt stocks in 2025.