The Federal Government’s debt repayments exceeded budgeted allocations by N1.9 trillion in the first nine months of 2025, highlighting growing fiscal pressures and the rising cost of servicing Nigeria’s debt obligations.
According to the third-quarter 2025 Budget Implementation Report released by the Budget Office of the Federation and reported by Punch, total debt-related payments, including domestic and foreign debt servicing as well as sinking fund contributions, reached N12.63 trillion between January and September. This surpassed the prorated budget provision of N10.74 trillion by N1.90 trillion, representing an overrun of 17.65 per cent.
Debt servicing alone accounted for N12.52 trillion during the period, exceeding its allocated N10.45 trillion by N2.07 trillion or 19.8 per cent.
A breakdown of the figures showed domestic debt service rose to N6.23 trillion, surpassing its budgeted provision by N832.42 billion. Foreign debt service climbed to N6.30 trillion, exceeding its allocation by N1.24 trillion.
The report revealed that debt servicing consumed 67.2 per cent of the Federal Government’s retained revenue of N18.63 trillion in the first three quarters of 2025. When sinking fund payments are included, debt-related obligations accounted for 67.8 per cent of total revenue.
This means that for every N100 retained by the government during the period, approximately N67 was spent on debt obligations, leaving about N33 for salaries, capital projects, transfers and other government responsibilities.
The report also highlighted significant revenue underperformance. Aggregate government revenue stood at N18.63 trillion, falling short of the projected N30.67 trillion by N12.03 trillion or 39.24 per cent.
In the third quarter alone, revenue generation reached N7.70 trillion against a target of N10.22 trillion, creating a shortfall of N2.52 trillion. The Budget Office attributed the gap largely to weaker-than-expected oil revenues despite stronger non-oil tax collections.
Capital expenditure remained constrained, with only N3.10 trillion spent on infrastructure and development projects during the first nine months of the year, far below the N17.58 trillion budgeted for the period. Debt-related payments were more than four times the amount spent on capital projects.
The report warned that the debt service-to-revenue ratio remained high and noted that limited fiscal space requires urgent efforts to boost revenue and rationalise spending.
Total Federal Government expenditure stood at N24.66 trillion during the period, compared to a prorated budget of N41.24 trillion. Despite spending below budget, debt obligations continued to receive priority.
The fiscal deficit for the first three quarters was N6.03 trillion against a projected N10.58 trillion. Financing sources totalled N12.07 trillion, driven by N4.81 trillion in multilateral and bilateral project-tied loans and N7.08 trillion in domestic borrowing.
Speaking in an interview with Bloomberg TV, Finance Minister Taiwo Oyedele said the government was considering refinancing some expensive debts and exploring additional funding options to bridge a budget deficit estimated at N30 trillion.
“We think that this timing is good for us to be able to maybe even refinance some of our expensive past debts, but also to raise more funding for our development at this critical time,” Oyedele said.
He added that discussions with multilateral institutions, including the World Bank, were ongoing, while investor confidence had improved following recent economic reforms and stronger oil prices.
Economists who spoke with Punch urged the government to focus on growing revenue, selling non-essential public assets and expanding private-sector participation in infrastructure financing to reduce dependence on borrowing.
Chief Executive Officer of CSA Advisory, Aliyu Ilias, said increasing borrowing inevitably leads to higher debt servicing costs and called for alternative funding strategies.
Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, warned that high interest rates on government borrowing were worsening the country’s debt burden.
Yusuf advocated stronger coordination between fiscal and monetary authorities and called for greater use of public-private partnerships to fund infrastructure projects currently financed through government budgets.
The latest figures underscore Nigeria’s continuing fiscal challenge, where rising debt costs and weak revenue growth continue to limit spending on infrastructure and development priorities.
