Nigeria’s fiscal position came under renewed scrutiny on Wednesday following revelations that debt servicing and personnel costs alone exceeded the Federal Government’s total revenue between January and July 2025.
Details contained in the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP), published by the Budget Office of the Federation, show that the Federal Government generated N13.67 trillion in aggregate revenue during the seven-month period. This figure fell significantly short of the pro rata revenue benchmark of N23.85 trillion, leaving a deficit of N10.19 trillion, or 42.7 per cent.
The data contrasts sharply with earlier public assurances by President Bola Tinubu, who in September declared that Nigeria had met its 2025 revenue target ahead of schedule and would no longer need to rely on borrowing to finance its budget.
While addressing members of The Buhari Organisation at the Presidential Villa, Abuja, the President attributed the claimed improvement to gains from non-oil revenue reforms. “Nigeria is not borrowing. We met our revenue target for the year by August,” Tinubu told the delegation, which included prominent figures of the ruling All Progressives Congress.
However, figures contained in the MTEF report paint a different picture, with the revenue shortfall largely driven by underperformance in the oil sector. Oil receipts for the period stood at N4.64 trillion, far below the N12.25 trillion pro rata target, representing a shortfall of N7.62 trillion or 62.2 per cent.
Dividends from government-linked entities such as Nigeria Liquefied Natural Gas and development finance institutions also missed expectations, generating N104.64 billion against a projected N428.71 billion.
Some non-oil revenue lines, however, showed relative strength. Company Income Tax collections reached N2.54 trillion, marginally exceeding the pro rata estimate of N2.49 trillion. Value Added Tax also outperformed projections, with the Federal Government’s share rising to N630.10 billion compared with a target of N567.54 billion.
Despite these gains, customs revenues declined sharply to N988.29 billion, falling 39.1 per cent below the expected N1.62 trillion. Federation Account levies dropped by more than 70 per cent, while inflows from oil price royalties and the Nigeria Police Trust Fund levy were either negligible or absent.
The MTEF report noted that while VAT and electronic money transfer levies provided limited relief, they were insufficient to counteract the deep revenue losses from oil and other underperforming streams. It warned that Nigeria remains highly exposed to oil-sector volatility despite gradual improvements in non-oil revenue mobilisation.
On the expenditure side, the Federal Government spent N9.81 trillion servicing domestic and external debts within the seven-month period. When combined with personnel costs of N4.51 trillion across ministries, departments, agencies, and government-owned enterprises, total spending on debt and wages reached N14.32 trillion.
This figure exceeded total revenue for the period, meaning that debt servicing and salaries alone accounted for approximately 105 per cent of government income. Debt servicing by itself consumed nearly 72 per cent of aggregate revenue, underscoring the strain repayments are placing on public finances.
While total expenditure of N20.40 trillion fell below the pro rata target of N32.08 trillion, recurrent spending largely remained on track. Actual recurrent expenditure was only 3.7 per cent below projections, whereas capital expenditure experienced severe cuts.
Capital spending for the period amounted to N3.60 trillion, compared with a prorated target of N13.67 trillion, representing a shortfall of nearly 74 per cent. Ministries, departments, and agencies received just N834.80 billion out of a projected N10.81 trillion for capital projects.
The Budget Office attributed the weak capital outturn partly to the extension of the 2024 budget, which remains in force until December 2025 following approval by the National Assembly. As a result, a portion of last year’s capital vote—estimated at N2.23 trillion—is still being implemented in 2025, limiting fresh releases under the current budget.
The report also recalled that Nigeria spent N13.12 trillion on debt servicing in 2024 alone, equivalent to 77.5 per cent of revenue, warning that high debt obligations continue to crowd out investment in critical sectors such as health, education, and infrastructure.
In a related development, President Tinubu has asked the National Assembly to pass the Appropriation Repeal and Re-enactment Bill 2 of 2024, proposing a total expenditure of N43.56 trillion for the 2025 fiscal year. According to the President, the move is aimed at ending the practice of running overlapping budgets and improving capital budget performance.
