260
Daniel Adaji
Nigeria’s foreign exchange (FX) reserves experienced a decline of $2.57bn in the first quarter of 2025, reflecting a 6.29 per cent drop over the three-month period. This is just as data published by the Central Bank of Nigeria (CBN) revealed that Nigeria spent a total of $816m on foreign debt servicing during the first two months of 2025.
Of this, $540m was spent in January, while $276m was allocated for debt servicing in February.
This data, obtained from the Central Bank of Nigeria, shows a steady decrease in the nation’s reserves from January to March 2025, primarily driven by foreign debt servicing pressures.
The CBN’s external reserves data showed that Nigeria’s gross foreign exchange reserves were valued at $40.88bn on January 2, 2025. By the end of the month, this figure had dropped to $39.72bn, representing a decrease of $1.16bn, approximately 2.84 per cent.
The downward trend continued into February, with reserves further declining to $38.42bn by the month’s end. This marked a reduction of $1.3bn, equivalent to a 3.27 per cent drop in just one month.
In March, the reserves fell slightly further to $38.31bn, showing a more modest decline of $110m. This cumulative fall over the quarter led to a total reduction of $2.57bn.
The CBN attributed the first-quarter decline to the financial strain of foreign debt servicing. Although Nigeria began 2025 with a relatively strong reserves position, the demand to meet foreign-denominated debt obligations led to a sharp drawdown.
CBN clarified that the decline in reserves was also a result of seasonal adjustments, including substantial interest payments on foreign debt.
“Reserves have continued to strengthen in 2025. While the first quarter figures reflected some seasonal and transitional adjustments, including significant interest payments on foreign-denominated debt, underlying fundamentals remain intact, and reserves are expected to continue improving over the second quarter of this year,” the CBN noted.
The high outflows in January were primarily due to scheduled foreign debt repayments, which put considerable pressure on the country’s FX reserves. Though the amount for February decreased, the persistent debt obligations continued to exert pressure on the reserves.
Despite the challenges experienced in the first quarter, the CBN remains optimistic about the outlook for Nigeria’s FX reserves in the coming months. The bank expects a recovery as oil production improves and non-oil foreign exchange earnings increase.
“Going forward, the CBN anticipates a steady uptick in reserves, 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 apex bank added.
The CBN has reaffirmed its commitment to effective reserve management and policies aimed at stabilizing the naira, attracting investment, and fostering long-term economic resilience.