FG overshoots borrowing limit as new debt reaches N12.62tn

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

The Fourth Quarter and Consolidated Budget Implementation Report for 2024 showed that the Federal Government’s new borrowings rose to N12.62 trillion, exceeding the budgeted N7.83 trillion by N4.79 trillion, representing a 61.2 per cent increase.

The higher borrowing requirement followed a substantial revenue shortfall, which pushed the fiscal deficit to N13.51 trillion, well above the approved deficit of N9.18 trillion.

According to the report, aggregate Federal Government revenue stood at N20.98 trillion, compared to the budget estimate of N25.88 trillion, leaving a shortfall of N4.90 trillion. Total expenditure, however, amounted to N34.49 trillion, only N561.29 billion below the approved estimate of N35.06 trillion, indicating that the wider fiscal gap was driven primarily by weaker revenue rather than increased spending.

“The revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N13.51tn in the 2024 fiscal year. This was N4.34tn (47.33 per cent) above the projected budget deficit estimate for the year,” the report stated.

The Budget Office noted that the deficit also surpassed the N10.55 trillion recorded in 2023, highlighting growing pressure on the country’s public finances.

An analysis of the government’s financing profile showed that domestic borrowing remained on target at N6.06 trillion, while foreign borrowing increased from the budgeted N1.77 trillion to N3.37 trillion, representing an excess of N1.60 trillion.

The report further disclosed that the Federal Government received N3.19 trillion in budget support, despite making no provision for such financing in the 2024 budget. The source of the budget support, which was classified as new borrowing, was not disclosed.

Together, domestic borrowing, foreign borrowing and budget support pushed total new borrowings to N12.62 trillion, exceeding the approved borrowing programme by N4.79 trillion.

The report showed that new borrowings financed about 36 per cent of the Federal Government’s 2024 budget, underscoring the country’s continued reliance on debt to fund public expenditure.

It also revealed that multilateral and bilateral project-tied loans amounted to N1.98 trillion, compared to the budget estimate of N1.05 trillion, while the expected N298.49 billion in privatisation proceeds failed to materialise.

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

Although total Federal Government revenue rose by 68.11 per cent from N12.48 trillion in 2023 to N20.98 trillion in 2024, it still fell 18.92 per cent short of the annual budget target.

Oil revenue remained the biggest source of weakness, with gross oil revenue standing at N15.07 trillion, N4.93 trillion below the budget estimate of N19.99 trillion. The report attributed the shortfall to lower international crude oil prices and average daily production of 1.54 million barrels per day, below the budget benchmark of 1.78 million barrels per day.

However, non-oil revenue outperformed expectations, reaching N16.09 trillion, surpassing the annual estimate of N10.81 trillion by 48.91 per cent. The improved performance was driven by stronger collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.

Despite the revenue shortfall, government expenditure remained broadly in line with the approved budget, rising to N34.49 trillion, a 49.7 per cent increase over the N23.04 trillion spent in 2023.

The report also showed that non-debt recurrent expenditure stood at N8.53 trillion, while debt servicing rose sharply during the year.

According to the Budget Office, total debt expenditure reached N12.36 trillion, exceeding the budgeted N8.27 trillion by 52.71 per cent.

“A total of N12.36tn was committed as total debt expenditure for the year, 52.71 per cent above the N8.27tn budgeted for the period,” the report stated.

Amid mounting fiscal pressures, capital expenditure also suffered. Although N5.81 trillion was released and cash-backed for capital projects during the 2024 fiscal year, Ministries, Departments and Agencies had utilised only N3.27 trillion, representing 81.91 per cent of the funds released as of June 30, 2025.

The report further revealed that Nigeria’s total public debt rose to N144.67 trillion at the end of December 2024, with the debt-to-GDP ratio climbing to 61.22 per cent, exceeding both Nigeria’s self-imposed threshold of 40 per cent and the 56 per cent benchmark for comparable economies.

Despite the weaker fiscal outcome, the Budget Office expressed optimism that ongoing reforms aimed at strengthening tax administration, improving non-oil revenue mobilisation, plugging revenue leakages and enhancing remittances from government-owned enterprises would reduce the country’s dependence on borrowing and improve fiscal sustainability over the medium term.

Commenting on the development, Chief Executive Officer of CSA Advisory, Aliyu Ilias, warned that the sharp increase in borrowing could worsen inflation and deepen the cost-of-living crisis.

“We already have issues of debt servicing. About N15tn is needed to service debt, and now we’re incurring more. Increased borrowing can fuel inflation and ultimately increase the cost of living,” he said.

He stressed that while borrowing is not inherently bad, the key issue is whether the funds are deployed productively. He urged the government to boost oil production and strengthen trade performance as alternatives to excessive borrowing.

Also speaking, Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr. Olusegun Omisakin, argued that the real concern is not the volume of borrowing but how the borrowed funds are utilised.

Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, called for stronger fiscal discipline and sustainable debt management.

The issue of Nigeria’s rising debt profile has also sparked public debate, with the Emir of Kano, Muhammadu Sanusi II, questioning the Federal Government’s continued reliance on borrowing despite the removal of fuel subsidy. The Presidency, however, defended the borrowing strategy, insisting the funds were being channelled into critical infrastructure projects.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, also maintained that the focus should not merely be on the volume of borrowing but on whether the loans finance productive investments capable of generating returns that exceed their cost, while reiterating that Nigeria must build a more sustainable fiscal system that relies less on debt financing.