Nigeria breached debt ceiling after borrowing 61% more than planned

Nigeria’s public debt breached the government’s sustainability threshold in 2024 after the federal government borrowed 61 percent more than budgeted to plug a wider-than-expected fiscal deficit caused by weak revenue performance.

The Budget Office of the Federation’s Fourth Quarter and Consolidated Budget Implementation Report for 2024 showed total public debt rose to N144.67 trillion, pushing the debt-to-GDP ratio to 61.22 percent at the end of December.

The ratio exceeded both Nigeria’s self-imposed ceiling of 40 percent and the 56 percent benchmark often applied to comparable economies.

The deterioration came as the federal government raised N12.62 trillion in fresh borrowing during the year, overshooting its approved borrowing programme of N7.83 trillion by N4.79 trillion, or 61.2 percent.

The larger borrowing requirement followed a widening fiscal deficit, which reached N13.51 trillion, 47.3 percent above the budgeted N9.18 trillion, after revenues fell well short of target while spending remained largely in line with the budget.

“The revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N13.51 trillion in the 2024 fiscal year,” the Budget Office said.

Federal government revenue stood at N20.98 trillion in 2024, missing the budget estimate of N25.88 trillion by N4.9 trillion, or 18.9 percent.

Although revenue increased 68.1 percent from N12.48 trillion recorded in 2023, it was insufficient to finance government spending of N34.49 trillion, which came in only 1.6 percent below the approved budget of N35.06 trillion.

The resulting financing gap pushed the fiscal deficit above both the budget estimate and the N10.55 trillion recorded in 2023.

Oil underperformed despite tax gains

The report attributed much of the revenue shortfall to weaker oil earnings.

Gross oil revenue amounted to N15.07 trillion, falling N4.93 trillion below the budget estimate of N19.99 trillion, as average crude production stood at 1.54 million barrels per day, well below the budget assumption of 1.78 million barrels per day.

Average oil prices also undershot expectations at $74.65 per barrel, compared with the budget benchmark of $77.96.

By contrast, non-oil revenue exceeded expectations.

Gross non-oil collections rose to N16.09 trillion, surpassing the budget estimate of N10.81 trillion by 48.9 percent, driven by stronger receipts from Companies Income Tax, Value Added Tax, Customs duties and the Electronic Money Transfer Levy.

While domestic borrowing remained on target at N6.06 trillion, foreign borrowing rose to N3.37 trillion, compared with the budgeted N1.77 trillion.

The government also received N3.19 trillion in budget support, despite making no provision for such financing in the 2024 budget.

The Budget Office classified the inflow as new borrowing but did not disclose its source.

In addition, multilateral and bilateral project-tied loans amounted to N1.98 trillion, nearly double the N1.05 trillion provided for in the budget.

Expected privatisation proceeds of N298.49 billion failed to materialise.

Overall, new borrowings financed about 36 percent of total federal expenditure during the year.

The report also underscored the growing cost of servicing Nigeria’s debt.

Debt-service expenditure rose to N12.36 trillion, exceeding the budget provision of N8.27 trillion by 52.7 percent, while non-debt recurrent expenditure came in below target at N8.53 trillion.

Capital spending remained constrained despite releases. The government released and cash-backed N5.81 trillion for capital projects, but ministries, departments and agencies had utilised N3.27 trillion, representing 81.9 percent of funds released, as of June 30, 2025.

Reforms expected to ease borrowing pressures

Despite the weaker fiscal outcome, the Budget Office said ongoing reforms to strengthen tax administration, improve non-oil revenue mobilisation, review fiscal incentives, plug revenue leakages and improve remittances from government-owned enterprises should gradually reduce dependence on borrowing.

The latest figures, however, reflect the scale of Nigeria’s fiscal challenge.

Although tax reforms helped lift non-oil revenue to record levels, persistent weakness in oil receipts and rising debt-service costs forced the government to borrow substantially more than planned, pushing public debt above its own sustainability threshold for the first time in recent years.