Nigeria is set to intensify its borrowing in the second half of 2025, targeting a fresh N7 trillion in the debt market to bridge the widening fiscal gap, according to a mid-year financial report.
The nation’s overall public debt has soared to nearly 50% of its gross domestic product (GDP), reigniting concerns around the sustainability of its debt profile. Zedcrest’s latest macroeconomic review notes that the federal government’s borrowing appetite will remain strong as actual revenues lag behind projections, driven primarily by suboptimal oil performance.
Despite the removal of fuel subsidies, which has helped cushion fiscal pressure, Nigeria’s revenue base has suffered due to falling crude oil prices and underperformance in production. Government income, heavily reliant on oil exports, remains volatile, exacerbated by loan repayments linked to oil collateral and global market uncertainties.
Over the past five months, Nigeria has consistently missed its OPEC production targets, weakening fiscal resilience. Although crude prices have recently rebounded due to Middle Eastern tensions, earlier price slumps had dampened government earnings.
Zedcrest’s report, “Charting Nigeria’s Next Reform Chapter,” reveals that Nigeria plans to raise N9.2 trillion in fresh debt this year. However, only N2.6 trillion has been secured through the first half, leaving over N7 trillion to be sourced between July and December 2025. These funds have been raised through a mix of FGN bonds, savings bonds, and Treasury bill auctions.
The 2025 budget outlines total revenue of N36.35 trillion and an expenditure plan of N49.74 trillion, creating a fiscal gap of N13.39 trillion. To close this, the government intends to secure N3.7 trillion from multilateral and bilateral partners and generate N312 billion from asset sales.
Positive trends in macroeconomic stability and improved credit outlooks are expected to ease local borrowing costs, Zedcrest noted, potentially opening more access to concessional loans. Already in 2025, Nigeria has received $2.2 billion in project-tied disbursements from lenders like the World Bank, China Development Bank, and China EXIM Bank.
There is speculation that the federal government may return to the international bond market before its Eurobond matures in November, possibly to refinance maturing external obligations. Zedcrest estimates that Nigeria’s debt stock could reach N162 trillion by year-end, pushing the debt-to-GDP ratio to 58.3% after a planned GDP rebasing.
However, the debt service-to-revenue ratio remains a critical concern, forecasted to remain around 150%, further intensifying fiscal stress. Revenue challenges are likely to persist as oil production has averaged just 1.6 million barrels per day (mbpd) year-to-date—far below the budgeted 2.06 mbpd.
Even with the recent launch of the new Obodo crude grade, analysts say it’s unlikely Nigeria will meet its production goals. Additionally, oil prices have hovered at an average of $65 per barrel, trailing the $75 benchmark used in budget assumptions.
The non-oil sector has experienced modest recovery, supported by better forex market conditions, which have strengthened profitability in real sectors. Still, the government is moving aggressively to shore up finances. Last month, President Bola Tinubu requested National Assembly approval for a $24.10 billion borrowing plan covering the 2024–2026 period.
The plan includes Eurobonds, bilateral loans, and concessional financing, with a portion expected to be disbursed over the next 5–6 years. For 2025 alone, the government seeks to raise $1.20 billion via Eurobonds and $2.53 billion through project-linked funding.
Cordros Capital predicts that actual borrowing figures will align more closely with the 2025 budget than broader MTEF targets. The World Bank has already approved $1.08 billion in concessional financing this year, though analysts caution that loan disbursements depend on meeting appraisal milestones and compliance conditions.
Between January and April 2025, oil production averaged 1.68 mbpd, with prices at $67.72/barrel—both under budget assumptions. Cordros expects continued reliance on domestic debt, given reduced currency risks and relatively better debt servicing terms.
Their forecast places 2025 federal revenue at N28.77 trillion—significantly lower than the projected N41.81 trillion—leading to a fiscal deficit of N16.47 trillion. Excluding N3.8 trillion in project loans and N312.33 billion from privatizations, net borrowing requirements may hit N12.36 trillion.
As Nigeria pivots away from Central Bank deficit financing, market-based borrowing remains its primary funding strategy amid elevated debt levels and uncertain oil revenues.
