Debt servicing, wages swallow 105% of Nigeria’s revenue

Nigeria’s public finances came under intense pressure in the first seven months of 2025, as the Federal Government spent more on debt servicing and salaries than it earned in revenue, according to official budget documents.

Data from the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), released by the Budget Office of the Federation, show that between January and July, the government earned ₦13.67 trillion, far below the prorated target of ₦23.85 trillion, resulting in a revenue shortfall of ₦10.19 trillion, or 42.7 per cent.

Despite President Bola Tinubu’s September claim that Nigeria had met its 2025 revenue target by August and stopped borrowing, the figures suggest otherwise.

The shortfall was driven mainly by weak oil earnings, which stood at ₦4.64 trillion against an expected ₦12.25 trillion, a gap of 62.2 per cent.

While some non-oil revenues performed better—Company Income Tax slightly exceeded target and VAT receipts rose by about 11 per cent—these gains were outweighed by declines in customs revenue, federation levies and oil-related inflows.

On the spending side, debt servicing and personnel costs alone exceeded total revenue.

Debt servicing reached ₦9.81 trillion, while salaries and related personnel costs amounted to ₦4.51 trillion.

Combined, they totalled ₦14.32 trillion, about 105 per cent of the revenue earned during the period.

Capital expenditure suffered the most severe cuts. Only ₦3.60 trillion was spent on capital projects, compared with a prorated allocation of ₦13.67 trillion, representing a shortfall of nearly 74 per cent. Spending by ministries and agencies was particularly weak.

The Budget Office attributed the poor capital outturn partly to the rollover of the 2024 budget into 2025, which has led to overlapping fiscal commitments.

To address this, President Tinubu has asked the National Assembly to pass a 2024 Appropriation Repeal and Re-enactment Bill, proposing spending of ₦43.56 trillion, aimed at ending the practice of running overlapping budgets.