Nigeria records ₦5.7trn deficit as weak revenues strain 2025 budget

Nigeria’s fiscal gap widened to ₦5.7 trillion in the first half of 2025 after government earnings came in far below expectations, according to the latest Budget Implementation Report (BIR).

Total revenue for the period was ₦10.18 trillion — roughly a quarter of the more than ₦40 trillion projected for the whole year.

In a foreword to the report, Minister of Budget and Planning Abubakar Atiku Bagudu said revenue weaknesses persisted across both oil and non-oil streams, even as the government continued to push funding toward capital projects.

He stressed the need to boost local revenue and protect long-term fiscal stability.

Non-oil income has increasingly become the mainstay of public finances, representing about 81.7 percent of total revenue and surpassing expectations at ₦15.34 trillion between January and June.

The report credited reforms in enforcement, customs automation and independent revenue remittances for the improvement.

Oil earnings, once Nigeria’s top revenue source, remained weak at ₦3.44 trillion, missing targets by wide margins in both quarters.

Average crude output of 1.60 and 1.68 million barrels per day fell short of the 2.12-million-barrel benchmark, hurting dollar inflows and reserves.

The BIR linked the poor performance to high production costs and unpaid statutory charges in the sector, adding that lower output and prices played a smaller role than expected.

Government spending reached ₦16.63 trillion in the first six months, against a prorated target of ₦25.97 trillion — translating to a 64 percent implementation rate.

To plug the gap, authorities turned to domestic borrowing, pushing debt service payments to ₦9.22 trillion — nearly matching total revenue.

The report warned that the debt service burden remains heavy and urged faster revenue growth and tighter spending priorities.

Officials say they hope to gradually lower the debt-service-to-revenue ratio through improved collections and cheaper financing.

Nigeria is moving ahead with major revenue reforms, including new tax rules scheduled for January 2026.

The government expects these changes to lift tax revenue from about 10 percent of GDP to roughly 18 percent within three years, creating room for more infrastructure spending and supporting its 7 percent annual growth target.