Nigeria’s debt repayment obligations exceeded budget provisions by nearly ₦2 trillion in the first nine months of 2025, according to fresh data from the Budget Office of the Federation, highlighting the growing pressure of debt servicing on government finances.
The 2025 third-quarter Budget Implementation Report showed that total debt-related payments, including domestic debt service, foreign debt service, and sinking fund contributions, reached ₦12.63 trillion between January and September.
This was significantly higher than the prorated budget allocation of ₦10.74 trillion, resulting in an overrun of ₦1.90 trillion, or 17.65 percent.
A closer look at the figures revealed that debt servicing alone accounted for ₦12.52 trillion, exceeding its budget provision by ₦2.07 trillion.
Domestic debt servicing consumed ₦6.23 trillion, while foreign debt obligations amounted to ₦6.30 trillion, both surpassing their respective budgeted allocations.
The report also highlighted the extent to which debt obligations are consuming government revenue.
Out of the Federal Government’s retained revenue of ₦18.63 trillion during the period, about 67 percent was spent on servicing debts.
This means that for every ₦100 earned by the government, roughly ₦67 went toward debt repayment, leaving a much smaller portion available for salaries, infrastructure, healthcare, education, and other public services.
Revenue performance remained a major challenge.
Actual revenue of ₦18.63 trillion fell short of the projected ₦30.67 trillion for the first three quarters of 2025, representing a deficit of more than ₦12 trillion.
The Budget Office attributed much of the shortfall to weaker-than-expected oil revenues despite improvements in non-oil collections.
One of the most striking findings in the report was the impact of debt repayments on infrastructure spending.
Capital expenditure during the period stood at only ₦3.10 trillion, meaning debt-related payments were more than four times the amount spent on capital projects nationwide.
Analysts have repeatedly warned that rising debt-service obligations are reducing fiscal space for development projects and social investments.
Several reports indicate that debt servicing remains one of the largest expenditure items in Nigeria’s budgets, with allocations continuing to rise as government borrowing increases.
The Federal Government has maintained that borrowing remains necessary to finance budget deficits and support economic growth.
However, tax reform advocate and Presidential Fiscal Policy Committee Chairman, Taiwo Oyedele, recently argued that Nigeria can no longer depend primarily on borrowing to fund development and must strengthen domestic revenue generation.
Recent budget documents show that debt servicing remains a major component of government expenditure, with the 2026 budget allocating approximately ₦15.8 trillion for debt service.
Economists warn that unless revenue generation improves significantly, the growing cost of debt repayment could continue to crowd out spending on critical sectors such as infrastructure, healthcare, education, and economic development.