May 29 (THEWILL) — Nigeria’s fiscal strain intensified in 2025 as the Federal Government spent more than two-thirds of its earnings on debt servicing, underscoring the widening gap between revenue generation and expenditure obligations.
According to the 2025 Third Quarter Budget Implementation Report, total debt service reached N12.52 trillion between January and September 2025, representing 67.22 percent of total retained revenue during the period.
This implies that for every N100 earned by the Federal Government, about N67 was committed to servicing existing debt obligations.
Debt servicing remained the single largest claim on government revenue, significantly constraining fiscal flexibility and limiting resources available for capital and social investment.
In the third quarter alone, debt service amounted to N3.41 trillion, consuming roughly 44 percent of revenue generated during the quarter.
A breakdown shows domestic debt service at N6.32 trillion for the nine months, while external debt service stood at N4.93 trillion, reflecting Nigeria’s dual exposure to both local and foreign borrowing pressures.
In Q3 specifically, domestic repayments totalled N1.80 trillion compared to N1.69 trillion for external obligations.
Total Federal Government revenue for the period stood at N18.63 trillion, significantly below the prorated budget target of N30.67 trillion, leaving a revenue gap of over N12 trillion.
This shortfall was driven largely by weak oil performance, with crude production averaging 1.64 million barrels per day against a 2.12 million benchmark, and prices averaging $68.50 per barrel below projections.
Despite oil weakness, non-oil revenue offered some support, contributing 68% of total inflows, with strong performances from Company Income Tax, VAT, and electronic transaction levies.
However, total spending remained constrained at N8.03 trillion in Q3, well below budget expectations, as debt service continued to crowd out capital and development expenditure.
Nigeria’s total public debt stock rose to N153.29 trillion as of September 2025, reinforcing concerns over fiscal sustainability and long-term budget pressure.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
