Quick Summary:
Nigeria’s FX reserves fell by $2.57 billion in Q1 2025, a 6.29% decrease
Drop driven by $816 million in foreign debt service payments
CBN remains optimistic about reserve recovery in Q2
Oil output and non-oil FX earnings seen as key rebound drivers
Nigeria’s FX Reserves Drop by $2.57 Billion in Q1 2025
Nigeria’s gross foreign exchange (FX) reserves declined by $2.57 billion between January and March 2025, representing a 6.29% drop over the three-month period.
This information is based on external reserves data available on the website of the Central Bank of Nigeria (CBN).
In a statement released earlier this week, the apex bank linked the fall in FX reserves to the burden of foreign debt servicing.
What the Data Shows
On January 2, 2025, Nigeria’s FX reserves stood at approximately $40.88 billion. By the end of January, the figure had dropped to $39.72 billion.
In February, the reserves fell further to $38.42 billion — a decrease of $1.3 billion, or 3.27%, within just one month.
The downward trend continued into March, with reserves closing at $38.31 billion. This marked an additional $110 million drop, equivalent to a 0.29% decline from February.
Cumulatively, these monthly declines resulted in a total reduction of $2.57 billion in the first quarter of 2025 — a 6.29% drop.
Debt Service Payments Driving the Decline
Despite a relatively strong reserves position at the end of 2024, the first quarter of 2025 saw a reversal. According to the CBN, this was primarily due to the country’s foreign debt servicing obligations.
The central bank highlighted that the Q1 figures reflected seasonal and transitional pressures, especially interest payments on foreign-denominated debt. These outflows have placed consistent strain on the nation’s reserves.
In its official statement, the CBN explained:
“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.”
Breakdown of Debt Service Payments
Available data from the CBN shows that Nigeria spent $540 million on foreign debt servicing in January 2025 and $276 million in February. This brings total debt servicing for the first two months to $816 million.
The high outflow in January was largely due to scheduled foreign debt repayments, which placed considerable pressure on reserves. Although February’s lower figure provided slight relief, the overall trend highlights the continued impact of external debt obligations on Nigeria’s financial stability.
Outlook: Reserves Expected to Rebound
Despite the Q1 setback, the CBN remains optimistic about a recovery in FX reserves over the coming months.
According to the bank:
“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 CBN reaffirmed its commitment to prudent reserve management, transparent reporting, and macroeconomic policies aimed at stabilizing the naira, attracting investment, and fostering long-term economic resilience.
