Debt service raises by 72% of FG revenue in 7 months 2025

The Federal Government spent nearly 72 per cent of its total revenue on debt servicing in the first seven months of 2025, highlighting the intensifying pressure Nigeria’s debt obligations are placing on public finances.

An analysis of the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper released by the Budget Office of the Federation shows that between January and July 2025, the Federal Government generated total revenue of N13.67 trillion.

Out of this amount, N9.81 trillion was used to service domestic and external debts, meaning 71.8per cent of total revenue was absorbed by debt servicing alone.

When personnel costs of N4.51 trillion for ministries, departments and agencies as well as government-owned enterprises are added, total spending on debt service and wages rose to N14.32 trillion.

This exceeded total revenue for the period, implying that debt servicing and salaries alone accounted for about 105% of Federal Government income.

The Budget Office data shows that the revenue shortfall was driven largely by a steep decline in oil earnings. Between January and July, oil revenue stood at N4.64 trillion, far below the pro rata target of N12.25 trillion, resulting in a shortfall of N7.62 trillion or 62.2per cent. .

Dividends from entities such as Nigeria Liquefied Natural Gas and development finance institutions also underperformed significantly, yielding just N104.64 billion compared with a projected N428.71 billion.

Some non-oil tax lines recorded modest gains. Company Income Tax generated N2.54 trillion, slightly above the pro rata estimate of N2.49 trillion. Value Added Tax also outperformed, with the Federal Government’s share rising to N630.10 billion against a target of N567.54 billion, an increase of about 11per cent.

These gains were outweighed by weaknesses elsewhere. Customs revenue declined to N988.29 billion, about 39.1per cent below its N1.62 trillion target. Federation Account levies fell sharply by 70.1per cent to N75.08 billion, while oil price royalties recorded no inflow during the period.

The MTEF noted that while VAT and Electronic Money Transfer Levy provided some relief, their overperformance was insufficient to offset the scale of oil revenue losses.

Overall, the Federal Government recorded aggregate revenue of N13.67 trillion against a pro rata target of N23.85 trillion, leaving a revenue gap of N10.19 trillion or 42.7per cent in the first seven months of the year.

On the expenditure side, total Federal Government spending, including government-owned enterprises and project-tied loans, stood at N20.40 trillion between January and July, compared with a pro rata target of N32.08 trillion, reflecting a shortfall of 36.4per cent.

Recurrent expenditure remained largely on track. Actual recurrent spending amounted to N15.68 trillion, just 3.7per cent below the pro rata target of N16.28 trillion.

However, within recurrent items, non-debt spending was squeezed. Non-debt recurrent expenditure stood at N5.87 trillion, down 26 per cent from the expected N7.93 trillion.

Personnel costs for MDAs came in at N3.91 trillion, about 11.7per cent below target, while personnel costs for government-owned enterprises matched the pro rata figure of N593.49 billion. Pension and gratuity payments were severely underfunded at N445.67 billion, barely half of the N842.34 billion expected.