Federal Government debt repayments outpaced budget provisions by nearly N2 trillion in the first nine months of 2025, squeezing fiscal space for infrastructure and services, the Budget Office of the Federation’s Q3 Budget Implementation Report has shown.
Total debt-related payments, covering domestic debt, foreign debt and sinking fund obligations, hit N12.63tn from January to September. That was N1.90tn or 17.65% above the prorated budget provision of N10.74tn for the period.
Debt servicing eats 67% of revenue
The Debt service alone gulped N12.52tn exceeding the projected N10.45tn by N2.07tn, 19.8 percent.
Breakdown;
-Domestic debt servicing: N6.23tn, N832.42bn above the N5.39tn allocation
– Foreign debt servicing: N6.30tn, N1.24tn above the N5.06tn budgeted
The burden left little room for other spending. Debt servicing consumed 67.2% of the FG’s retained revenue of N18.63tn in 9 months. Including sinking fund payments, debt obligations took 67.8% of total revenue. Put simply, about N67 of every N100 earned went to debt, leaving just N33 for salaries, projects, overhead and other responsibilities.
Revenue and capital spending lag
Revenue underperformed badly. The government generated N18.63tn, N12.03tn short of the N30.67tn target. Q3 alone brought N7.70tn vs N10.22tn target, with the Budget Office blaming weaker oil revenue despite better non-oil collections.
Capital expenditure also lagged. Only N3.10tn was spent on projects against N17.58tn budgeted. Debt payments were thus over 4x capital spending in the period.
Overall expenditure stood at N24.66tn below the N41.24tn prorated estimate. Fiscal deficit came in at N6.03tnvs N10.58tn projected, financed mainly by N4.81tn in project-tied multilateral/bilateral loans and N7.08tn domestic borrowing.
Govt eyes refinancing, experts urge caution
The Finance Minister and Coordinating Minister of the Economy, Mr. Taiwo Oyedele said government is exploring debt refinancing and new funding under “very good” market conditions.
“We think that this timing is good for us to be able to maybe even refinance some of our expensive past debts, but also to raise more funding for our development at this critical time,” he told Bloomberg TV Wednesday. He said talks with the World Bank and other multilaterals continue as the FG works to close an estimated N30tn deficit this year.
Economists warned of the borrowing cycle.
CSA Advisory’s Dr Aliyu Ilias: “The more you borrow, the more you are also incurring more debt services.” He urged asset sales, maximizing oil windfalls, and tax reforms.
CPPE CEO Dr Muda Yusuf flagged high interest rates on bonds and treasury instruments as a “major issue” driving costs. “It’s helping us to attract portfolio investment, but it’s creating a huge burden of debt service.
We have to balance those two objectives,” he said, adding that FG should focus on core areas like security, interstate highways and power while using PPPs for other projects.
The Budget Office warned the high debt service-to-revenue ratio leaves limited fiscal space and called for stronger revenue mobilization and spending adjustments
