FG exceeds 2024 borrowing target by N4.79trn as revenue falls short

The Federal Government exceeded its 2024 borrowing target by N4.79tn after a larger-than-expected budget deficit forced it to raise significantly more funds than originally planned, according to the Budget Office of the Federation.

The Budget Office’s Fourth Quarter and Consolidated Budget Implementation Report for 2024 showed that the government borrowed N12.62tn during the year, surpassing the budgeted N7.83tn by 61.2 per cent.

The increase in borrowing followed a revenue shortfall that widened the fiscal deficit to N13.51tn, exceeding the approved deficit of N9.18tn by N4.34tn, or 47.33 per cent. The deficit was also higher than the N10.55tn recorded in 2023.

According to the report, the Federal Government generated N20.98tn in revenue against a budget target of N25.88tn, leaving a shortfall of N4.90tn. Total expenditure stood at N34.49tn, only N561.29bn below the approved estimate of N35.06tn, indicating that weaker revenue rather than higher spending drove the larger fiscal gap.

An analysis of the financing profile showed that domestic borrowing remained on target at N6.06tn, while foreign borrowing rose to N3.37tn from the budgeted N1.77tn, exceeding projections by N1.60tn.

The government also received N3.19tn in budget support despite making no provision for it in the 2024 budget. The Budget Office classified the support as new borrowing but did not disclose its source.

Combined with domestic and foreign borrowings, the budget support raised total new debt to N12.62tn, accounting for about 36 per cent of the Federal Government’s 2024 budget.

The report further showed that multilateral and bilateral project-tied loans reached N1.98tn, above the budget estimate of N1.05tn, while expected privatisation proceeds of N298.49bn failed to materialise.

The Budget Office attributed the wider financing gap largely to revenue underperformance.

Although total revenue increased by N8.50tn, or 68.11 per cent, from N12.48tn recorded in 2023, it remained N4.89tn below the annual target.

Oil revenue was the weakest performer, with gross oil receipts of N15.07tn falling N4.93tn short of the budget estimate of N19.99tn. The report attributed the shortfall to lower crude oil prices and production, with average oil prices at $74.65 per barrel against the budget benchmark of $77.96, while average daily production stood at 1.54 million barrels per day, below the projected 1.78 million barrels.

In contrast, non-oil revenue outperformed expectations, rising to N16.09tn, exceeding the annual target of N10.81tn by N5.29tn. The improvement was driven by stronger collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.

Despite revenue challenges, government spending remained largely in line with the approved budget. Total expenditure rose to N34.49tn from N23.04tn in 2023, representing an increase of N11.45tn or 49.7 per cent.

Debt servicing, however, rose sharply. The report showed that N12.36tn was spent on debt obligations, exceeding the budgeted N8.27tn by 52.71 per cent.

Capital project implementation also lagged. Although N5.81tn was released and cash-backed for capital projects, Ministries, Departments and Agencies had utilised only N3.27tn, representing 81.91 per cent of the released funds as of June 30, 2025.

Nigeria’s public debt continued to climb, reaching N144.67tn by the end of December 2024. The debt-to-GDP ratio increased to 61.22 per cent, surpassing both Nigeria’s self-imposed threshold of 40 per cent and the 56 per cent benchmark for comparable economies.

Despite the fiscal pressures, the Budget Office expressed optimism that reforms aimed at strengthening tax administration, improving non-oil revenue mobilisation, plugging leakages and increasing remittances from government-owned enterprises would reduce dependence on borrowing over the medium term.

Reacting to the report, Chief Executive Officer of CSA Advisory, Aliyu Ilias, warned that the scale of new borrowing could worsen inflation and increase the cost of living, noting that Nigeria’s growing debt service burden remains a major concern.

Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr. Olusegun Omisakin, argued that borrowing itself is not the problem but how the funds are deployed, stressing that investments in productive infrastructure would justify increased debt.

Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, urged the government to slow the pace of borrowing and improve revenue generation to ensure debt sustainability.

Concerns over Nigeria’s rising debt profile have also sparked public debate. The Emir of Kano, Muhammadu Sanusi II, recently questioned the government’s continued reliance on borrowing despite the removal of petrol subsidy, warning against fiscal indiscipline.

The Presidency defended the borrowing strategy, insisting that the loans are targeted at critical infrastructure, while the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, maintained that borrowing should be assessed based on its purpose, cost and expected economic returns rather than its size alone.

Oyedele, however, has also acknowledged that Nigeria cannot continue financing development primarily through borrowing and must build a more sustainable fiscal system capable of supporting infrastructure, education, healthcare, security and social protection.