By Boluwatife Oshadiya | May 28, 2026
Key Points
- Federal Government recorded N11.89 trillion in fresh borrowings in the first nine months of 2025
- Capital expenditure stood at N3.10 trillion, representing only 17.66% of the budgeted allocation
- Multilateral and bilateral project-tied loans exceeded budget projections by more than 90%
Main Story
The Federal Government borrowed N11.89 trillion in the first nine months of 2025 but spent only N3.10 trillion on capital projects during the same period, according to the 2025 third-quarter Budget Implementation Report released by the Budget Office of the Federation.
The report showed that the fresh borrowings consisted of N7.08 trillion in domestic debt and N4.81 trillion in multilateral and bilateral project-tied loans. No foreign borrowing was recorded within the period despite a budget provision of N1.38 trillion for external financing.
Actual borrowing exceeded the three-quarter projection of N10.34 trillion by N1.54 trillion, representing an overrun of 14.91%. Meanwhile, capital expenditure performance remained significantly below expectations, with only 17.66% of the N17.58 trillion budgeted for capital projects released and utilised.
The Budget Office disclosed that total deficit financing items reached N12.07 trillion during the period, above the N10.58 trillion target by N1.49 trillion. Domestic borrowing exceeded projections by N639.89 billion, while multilateral and bilateral project-tied loans surpassed their target by N2.28 trillion.
Despite the increased borrowing, capital spending by ministries, departments and agencies stood at only N1.21 trillion against a budgeted N13.90 trillion. Government-owned enterprises fully utilised their N615.68 billion capital allocation, while grants and donor-funded projects outperformed projections at N1.08 trillion.
However, spending tied directly to multilateral and bilateral project loans recorded zero utilisation despite a budget allocation of N2.52 trillion.
“Capital releases were affected by the bottom-up cash release process, availability of resources and government priorities,” the Budget Office stated in the report.
The report also revealed that N780.28 billion was released to MDAs for capital projects in the third quarter alone.
The Issues
The widening gap between borrowing and infrastructure spending continues to raise concerns over fiscal efficiency and debt sustainability in Nigeria. Data from the Debt Management Office already shows Nigeria’s public debt stock has continued to rise amid persistent budget deficits and weak revenue mobilisation.
Analysts have repeatedly warned that increasing debt without corresponding productive investment could worsen debt servicing pressures and weaken economic growth. Nigeria currently spends a substantial portion of federal revenue on debt servicing obligations, limiting fiscal space for infrastructure, healthcare, education and social spending.
The absence of spending under multilateral and bilateral project-tied loans also raises implementation concerns around project execution capacity and bureaucratic bottlenecks within public institutions.
What’s Being Said
“Borrowing is not necessarily the problem. The challenge is whether the debt is being converted into productive infrastructure that can stimulate growth and generate future revenue,” said Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise.
Former Labour Party presidential candidate Peter Obi also criticised the government’s borrowing strategy earlier this year.
“Nigeria cannot continue borrowing without measurable improvements in productivity, living standards and economic competitiveness,” Obi stated during a recent economic policy forum in Abuja.
Meanwhile, fiscal policy analysts have argued that weak capital expenditure implementation remains one of the biggest obstacles to Nigeria’s infrastructure development goals.
What’s Next
- The Federal Government plans to increase borrowing to N29.20 trillion in the 2026 fiscal year following the expansion of the proposed budget size
- Lawmakers are expected to scrutinise debt utilisation and capital expenditure performance during upcoming budget defence sessions
- Economic analysts will closely monitor Nigeria’s debt-to-revenue ratio and fiscal deficit trends ahead of the 2026 budget implementation cycle
The Bottom Line: Nigeria’s latest fiscal data highlights a growing disconnect between rising government borrowing and actual infrastructure execution. Unless capital spending efficiency improves significantly, concerns over debt sustainability and economic productivity are likely to intensify.
