By Abigail David
The Federal Government spent N12.63tn on debt-related obligations between January and September 2025, exceeding the prorated budget allocation of N10.74tn by N1.90tn, according to the third-quarter Budget Implementation Report released by the Budget Office of the Federation.
The report showed that debt servicing accounted for the bulk of the expenditure, rising to N12.52tn against a budget provision of N10.45tn, resulting in an overrun of N2.07tn or 19.8 per cent.
A breakdown of the figures revealed that domestic debt servicing consumed N6.23tn, surpassing its allocation by N832.42bn, while foreign debt servicing reached N6.30tn, exceeding the budget by N1.24tn.
The data further indicated that debt servicing alone absorbed 67.2 per cent of the Federal Government’s retained revenue of N18.63tn during the period. When sinking fund payments are included, debt-related obligations accounted for about 67.8 per cent of total revenue.
This means that for every N100 earned by the Federal Government, about N67 was used to service debts, leaving only N33 for salaries, capital projects, overheads and other government obligations.
The report also highlighted a significant revenue shortfall, with actual revenue of N18.63tn falling N12.03tn below the projected N30.67tn for the first three quarters of the year.
In the third quarter alone, government revenue stood at N7.70tn, representing a shortfall of N2.52tn from the quarterly target of N10.22tn. The Budget Office attributed the underperformance largely to weaker-than-expected oil revenues despite improvements in non-oil collections.
Rising debt obligations continued to constrain capital spending, with only N3.10tn released for capital projects during the period, compared to a budgeted N17.58tn. Debt-related payments were therefore more than four times the amount spent on infrastructure and other capital investments.
The report warned that the high debt service-to-revenue ratio was limiting fiscal space and underscored the need for stronger revenue mobilisation and expenditure reforms.
Meanwhile, Finance Minister, Taiwo Oyedele, said the government is exploring options to refinance expensive debt and secure additional funding to address the country’s budget deficit.
Speaking in an interview with Bloomberg TV, Oyedele said favourable market conditions and higher crude oil prices present an opportunity for Nigeria to access financing at better terms.
He added that discussions were ongoing with the World Bank and other multilateral institutions, while investor confidence had improved following recent economic reforms.
Economists have urged the government to reduce dependence on borrowing by expanding revenue sources, implementing tax reforms, selling non-strategic public assets and increasing private-sector participation in infrastructure financing.
