Federal Government spent N1.90 trillion more than it had budgeted on debt-related payments in the first nine months of 2025, according to data from the Budget Office of the Federation. Total debt-related payments reached N12.63 trillion against a prorated budget provision of N10.74 trillion, an overrun of 17.65 percent.

The figures expose a deepening pressure on the country’s public finances. Debt is taking an increasing share of government revenue, leaving less money for roads, hospitals, schools, power infrastructure, and social investment. For a country with significant development needs and a population of over 220 million, that trade-off has serious consequences.

Debt Service Alone Exceeded Budget by Over N2 Trillion

Within the broader debt-related figure, debt service payments alone reached N12.52 trillion in the first three quarters of 2025. The prorated budget for the same period was N10.45 trillion, meaning actual payments exceeded the allocation by N2.07 trillion, a 19.8 percent overshoot.

Both domestic and foreign debt service contributed to the overrun. Domestic debt payments came in at N6.23 trillion, above the N5.39 trillion provision by N832.42 billion. Foreign debt service reached N6.30 trillion, exceeding its N5.06 trillion allocation by N1.24 trillion.

The fact that both sides of the debt book ran over budget reflects a structural problem. It is not a one-off spike in one category. It is broad-based pressure from borrowing on both the domestic and international sides of the ledger.

Key Figures at a Glance

Item	Budget (Prorated)	Actual	Overrun
Total debt-related payments	N10.74 trillion	N12.63 trillion	N1.90 trillion (17.65%)
Debt service payments	N10.45 trillion	N12.52 trillion	N2.07 trillion (19.8%)
Domestic debt service	N5.39 trillion	N6.23 trillion	N832.42 billion
Foreign debt service	N5.06 trillion	N6.30 trillion	N1.24 trillion
Retained government revenue	N30.67 trillion	N18.63 trillion	Shortfall of N12.03 trillion
Capital expenditure	N17.58 trillion	N3.10 trillion	Well below budget
Debt service as share of revenue	N/A	67.2 percent	N/A

N67 Out of Every N100 in Revenue Went to Debt

Perhaps the most striking figure in the Budget Office data is the debt-to-revenue ratio. Debt service consumed 67.2 percent of the Federal Government’s retained revenue of N18.63 trillion in the first nine months of 2025. When the sinking fund contribution is added, total debt-related payments absorbed approximately 67.8 percent of retained revenue.

Stated simply, for every N100 the Federal Government kept from January to September 2025, about N67 went straight to debt repayment. Only roughly N33 remained to fund salaries, overheads, capital projects, transfers to states, social programmes, and every other obligation the government carries.

This is the core of Nigeria’s fiscal problem. The debate about the country’s debt is often framed around the total stock of what is owed. But the more immediate concern is the flow, specifically how much revenue remains after debt is serviced. At 67 percent, very little is left.

Revenue Fell Nearly 40 Percent Below Target

The debt overrun was made worse by a significant revenue shortfall. The Federal Government retained N18.63 trillion between January and September 2025, which was N12.03 trillion below the projected target of N30.67 trillion for the period, a shortfall of 39.24 percent.

In the third quarter alone, the government generated N7.70 trillion against a quarterly target of N10.22 trillion, falling short by N2.52 trillion or 24.64 percent.

The Budget Office attributed the revenue weakness primarily to persistent oil revenue shortfalls. Nigeria’s oil earnings have repeatedly underperformed budget projections in recent years, driven by a combination of crude theft, pipeline disruptions, reduced production volumes and global price uncertainty.

Progress has been made on non-oil revenue. The Federal Inland Revenue Service has reported improved tax collections, and reforms to stamp duties and other levies have added to the base. But oil remains dominant enough in the revenue mix that when it disappoints, the entire budget feels it.

Capital Spending Took the Hardest Hit

When revenue falls short and debt service consumes most of what remains, something else has to give. In Nigeria’s 2025 experience, that something is capital spending.

The Federal Government spent only N3.10 trillion on capital projects in the first nine months of 2025, against a budgeted provision of N17.58 trillion. Actual debt-related payments of N12.63 trillion were more than four times the amount spent on capital projects during the same period.

That imbalance has direct consequences for Nigerians. Planned roads are not being built. Power projects are delayed. Hospitals and schools lack the promised funding. Contractors who depend on government releases to pay workers and buy materials go unpaid. The infrastructure gap that has long held back the Nigerian economy has not closed. It widens.

For businesses, poor infrastructure means higher logistics costs, longer delivery times, more hours lost to grid failures and greater reliance on expensive self-generated power. These costs ultimately get passed on to consumers or absorbed as reduced profit margins, both of which slow investment and economic activity.

Why the Debt Burden Keeps Growing

Nigeria’s debt servicing pressure is not the result of a single decision. It is the product of several forces working together over a number of years.

Domestic borrowing costs have climbed sharply. The CBN’s monetary tightening cycle, designed to fight inflation, pushed benchmark interest rates higher. Government borrowing through bonds and treasury bills became more expensive. Existing debt that rolls over at higher rates increases the servicing burden without any new borrowing taking place.

Foreign debt service has also become heavier in naira terms because of exchange rate depreciation. Even if the dollar or euro value of a payment stays the same, its naira equivalent rises every time the currency weakens. Given how much the naira has moved in recent years, this effect is substantial.

At the root of it all is a revenue base that remains too small for the size of the country’s obligations. Nigeria’s tax-to-GDP ratio is among the lowest in Africa. The informal economy is large and largely uncaptured by the tax system. Oil earnings are volatile and declining as a long-run share of GDP. The result is a government that consistently borrows to fill the gap between what it spends and what it collects.

What Economists Are Saying

Economists who commented on the data called for a fundamental shift in how the government finances itself, rather than incremental adjustments to borrowing levels.

Dr Aliyu Ilias, Chief Executive Officer of CSA Advisory, warned that continued borrowing will inevitably lead to higher future servicing costs. He called on the government to look seriously at alternative funding sources, including asset monetisation and deeper tax reform, rather than treating debt as the default answer to every financing gap.

Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, raised concerns about the interest rates attached to government debt instruments. He argued that while high rates on bonds and treasury bills attract portfolio investors, they come at the cost of raising the government’s own debt service bill. He called for closer coordination between the fiscal authorities and the CBN to find a balance that does not punish the budget for monetary policy decisions. He also pushed for a broader programme of public-private partnerships so that infrastructure financing does not depend entirely on the government’s balance sheet.

The Government’s Response: Refinancing and Reform

Finance Minister Taiwo Oyedele said the government is exploring options to refinance some of its more expensive legacy debts at lower rates, taking advantage of improved investor sentiment and a period of relatively better oil prices to lock in cheaper funding where possible.

The government has also been in discussions with the World Bank and other multilateral development institutions as it works to finance a budget deficit estimated at N30 trillion. Multilateral loans typically carry lower interest rates and longer tenors than commercial market borrowing, thereby reducing the near-term servicing burden if substituted for costlier instruments.

Oyedele has, however, also acknowledged that borrowing alone cannot solve Nigeria’s fiscal challenge. He has called for structural improvements in revenue generation and greater efficiency in the spending of government funds.

What This Means for Ordinary Nigerians

It is easy to see debt-repayment overruns as an abstract budget-accounting problem. The real-world effects are anything but abstract.

When two-thirds of government revenue is consumed by debt service, the remainder must be stretched across salaries and wages, statutory transfers to states and local governments, recurrent overheads and a capital budget that has already been shown to be drastically underfunded. Every naira that goes to a creditor is a naira that cannot go to a road, a rural health centre, a primary school classroom or a farmer’s input subsidy.

For households already under pressure from high inflation and rising food prices, the government’s inability to make meaningful capital investments means the structural conditions driving up living costs remain unchanged. Poor roads mean higher food prices. Unreliable power means higher business costs. These are reflected in the prices people pay every day.

For businesses, the picture is similar. A government that cannot fund capital projects is not building the enabling environment that private investment needs. Without infrastructure, the cost of doing business in Nigeria stays high relative to comparable markets, and the incentive to invest, expand and hire is suppressed.

Frequently Asked Questions

By how much did FG debt repayments exceed the budget in 2025?

Federal Government debt-related payments exceeded the prorated budget by N1.90 trillion in the first nine months of 2025, an overshoot of 17.65 percent. Debt service payments specifically exceeded their allocation by N2.07 trillion, or 19.8 percent.

How much did Nigeria spend on debt service between January and September 2025?

The Federal Government spent N12.52 trillion on debt service in the first three quarters of 2025. When the sinking fund contribution is included, total debt-related payments reached N12.63 trillion.

What percentage of government revenue went to debt repayment?

Debt service consumed 67.2 percent of the Federal Government’s retained revenue of N18.63 trillion in the first nine months of 2025. Including the sinking fund, the figure rises to approximately 67.8 percent.

How far below target was government revenue in 2025?

The Federal Government retained N18.63 trillion against a projected target of N30.67 trillion for the nine-month period, a shortfall of N12.03 trillion or 39.24 percent. In the third quarter alone, revenue was N2.52 trillion below its quarterly target.

Why did debt repayments exceed the budget?

The overrun reflects high domestic borrowing costs driven by elevated interest rates, rising naira-equivalent foreign debt service due to exchange rate depreciation, and a weak revenue base, leaving the government’s finances stretched on both sides simultaneously.

How much did the government spend on capital projects compared to debt?

The government spent N3.10 trillion on capital projects in the first nine months of 2025 against a budgeted allocation of N17.58 trillion. Debt-related payments at N12.63 trillion were more than four times capital expenditure for the same period.

What is the government doing to address the debt burden?

The government is exploring refinancing of expensive past debts, pursuing multilateral financing from institutions such as the World Bank, and promoting private-sector participation in infrastructure through public-private partnerships. Finance Minister Taiwo Oyedele has also stated that Nigeria must build a more sustainable revenue base rather than depending primarily on borrowing.

Why does Nigeria keep running into debt servicing problems?

Nigeria’s recurring debt servicing pressure reflects a long-standing mismatch between the government’s expenditure ambitions and its revenue capacity. A low tax-to-GDP ratio, heavy dependence on volatile oil revenues, high domestic borrowing costs and exchange rate pressure on foreign obligations all combine to keep the servicing burden elevated even as reform efforts continue.

The Bottom Line

The nine-month data from the Budget Office paints a clear picture of Nigeria’s fiscal challenge in 2025. The Federal Government overspent its debt budget by N1.90 trillion while simultaneously falling N12.03 trillion short of its revenue target. Capital spending received just a fraction of its budgeted allocation, and debt service alone absorbed more than two-thirds of every naira the government retained.

These numbers are not just statistics. They describe a government that spends most of its income on servicing past obligations, while the infrastructure and services Nigerians need remain underfunded.

The path forward requires more than managing existing debt. Nigeria needs a sustained expansion of its revenue base through tax reform and economic growth, a reduction in borrowing costs through coordination between fiscal and monetary policy, and a structural shift in how infrastructure is financed so that private capital carries a much larger share of the load. Until those changes take root, debt servicing will continue to crowd out the investments that the country’s long-term development depends on.

Source: Budget Office of the Federation, January to September 2025 fiscal data. Expert commentary attributed to Dr Aliyu Ilias of CSA Advisory and Dr Muda Yusuf of the Centre for the Promotion of Private Enterprise. This article is for informational purposes only.