Nigeria’s debt repayments exceeded budgeted provisions by N1.9 trillion in the first nine months of 2025, underscoring mounting fiscal pressures as rising debt costs continue to consume a large share of government revenue.
According to the Federal Government’s third-quarter Budget Implementation Report, total debt-related payments, including domestic and foreign debt servicing as well as sinking fund contributions, reached N12.63 trillion between January and September. The figure surpassed the prorated budget allocation of N10.74 trillion by 17.7%.
Debt servicing alone accounted for N12.52 trillion during the period, exceeding the N10.45 trillion budgeted by N2.07 trillion, or 19.8%.
Domestic debt servicing totaled N6.23 trillion, exceeding its allocation by N832.4 billion, while foreign debt servicing reached N6.30 trillion, surpassing budget projections by N1.24 trillion.
The figures show that 67.2% of the Federal Government’s retained revenue of N18.63 trillion was used to service debt during the first three quarters of the year. Including sinking fund payments, debt-related obligations consumed nearly 68% of government revenue.
That left roughly one-third of retained revenue available for salaries, overhead costs, capital projects, transfers and other government obligations.
The report also revealed a significant revenue shortfall. Total government revenue stood at N18.63 trillion, falling N12.03 trillion, or 39.2%, below the projected N30.67 trillion for the period.
In the third quarter alone, revenue totaled N7.70 trillion, missing the quarterly target of N10.22 trillion by N2.52 trillion. The Budget Office attributed the shortfall primarily to weaker-than-expected oil revenue despite stronger non-oil tax collections.
Rising debt obligations also constrained infrastructure spending. Capital expenditure amounted to only N3.10 trillion 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 higher than spending on capital projects, highlighting the extent to which debt servicing continues to crowd out investment in infrastructure and development.
The Budget Office warned that the debt service-to-revenue ratio remained elevated and called for urgent measures to improve revenue generation and rationalize government spending.
Overall federal expenditure reached N24.66 trillion during the first three quarters, below the prorated budget estimate of N41.24 trillion. However, debt obligations continued to receive priority in spending allocations.
Nigeria recorded a fiscal deficit of N6.03 trillion during the period, compared with a budgeted deficit target of N10.58 trillion. Financing totaled N12.07 trillion, largely supported by N4.81 trillion in multilateral and bilateral project loans and N7.08 trillion in domestic borrowing.
Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, said the government is considering refinancing some of its more expensive debts while exploring additional funding sources 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 in an interview with Bloomberg TV.
He said improved market conditions, stronger investor confidence and higher crude oil prices had created opportunities for Nigeria to access financing on more favorable terms.
Oyedele added that discussions were ongoing with the World Bank and other multilateral institutions as the government seeks less expensive financing options while continuing economic and tax reforms.
Despite the improved outlook from higher oil prices, officials acknowledge that Nigeria cannot rely indefinitely on borrowing to finance development.
Economists have urged the government to focus on expanding revenue sources, selling underutilized public assets and encouraging greater private-sector participation in infrastructure financing.
Aliyu Ilias, chief executive officer of CSA Advisory, said growing debt levels inevitably lead to higher debt-servicing costs and called on the government to reduce its dependence on borrowing.
He suggested asset sales, stronger oil revenues and tax reforms could help narrow the fiscal gap and provide alternative sources of funding.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, warned that high domestic interest rates were increasing the cost of government borrowing and worsening debt-service pressures.
Yusuf urged closer coordination between fiscal and monetary authorities to lower borrowing costs and advocated wider use of public-private partnerships for infrastructure projects.
He also called for the Federal Government to focus spending on core priorities such as security, power and major transportation infrastructure while allowing state governments to assume greater responsibility for other development projects.
The report highlights Nigeria’s continuing fiscal challenge, with weak revenue generation and rising debt obligations limiting the government’s capacity to fund infrastructure and social investments despite ongoing economic reforms.
