The Federal Government spent N12.63tn on debt-related obligations between January and September 2025, surpassing its budgetary provision for the period by N1.90tn, according to the latest Budget Implementation Report released by the Budget Office of the Federation.
The report revealed that debt servicing accounted for the bulk of the expenditure, with N12.52tn spent during the first nine months of the year, exceeding the prorated allocation of N10.45tn by N2.07tn.
A breakdown of the figures showed that domestic debt servicing consumed N6.23tn, which was N832.42bn above budget, while foreign debt servicing reached N6.30tn, surpassing the projected N5.06tn by N1.24tn.
The rising debt burden meant that a significant portion of government revenue was channelled into loan repayments. Out of the N18.63tn retained by the Federal Government during the period, about 67 per cent was used to service debts. Including sinking fund payments, debt obligations accounted for nearly 68 per cent of total revenue.
This implies that for every N100 earned by the government, approximately N67 went towards debt repayment, leaving only N33 available for recurrent expenditure, infrastructure projects and other government responsibilities.
The report also highlighted a major revenue shortfall. While the government projected N30.67tn in revenue for the first three quarters of the year, actual collections stood at N18.63tn, leaving a gap of N12.03tn.
In the third quarter alone, revenue generation reached N7.70tn, falling short of the N10.22tn target by N2.52tn. The Budget Office attributed the deficit largely to weaker-than-expected oil earnings despite improvements in non-oil revenue streams.
Capital expenditure remained significantly below target, with only N3.10tn spent on projects against a budgeted N17.58tn for the period. Consequently, debt-related payments were more than four times the amount spent on capital development.
Although total government expenditure of N24.66tn was lower than the budgeted N41.24tn, the report noted that debt servicing continued to take precedence over infrastructure funding and other development needs.
The fiscal deficit stood at N6.03tn during the review period, while financing sources amounted to N12.07tn, driven mainly by domestic borrowing and project-tied loans from bilateral and multilateral institutions.
Meanwhile, the Federal Government is exploring options to refinance some of its existing debts and secure additional funding to bridge the budget gap. Speaking in an interview with Bloomberg TV, Finance Minister, Taiwo Oyedele, said favourable market conditions could allow the country to refinance costly obligations and raise fresh funds for development projects.
According to him, rising crude oil prices and growing investor confidence have improved Nigeria’s fiscal outlook, creating opportunities for more affordable financing.
Economic experts, however, urged the government to reduce its dependence on borrowing. Chief Executive Officer of CSA Advisory, Aliyu Ilias, called for increased revenue generation through asset sales, tax reforms and improved oil earnings.
Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, warned that high borrowing costs were worsening debt-service pressures. He advocated stronger coordination between fiscal and monetary authorities and greater private-sector participation in infrastructure development through public-private partnerships.
The economists maintained that expanding revenue sources and reducing borrowing costs remain critical to easing fiscal pressures and creating more room for infrastructure investment and economic growth.