Nigeria Spends 72% of Federal Revenue on Debt Servicing in First Seven Months of 2025

Nigeria’s Federal Government spent nearly three-quarters of its total revenue on servicing domestic and external debt in the first seven months of 2025, highlighting the mounting pressure of debt obligations on public finances. According to the 2026–2028 Medium-Term Expenditure Framework (MTEF) released by the Budget Office, total revenue generated between January and July was N13.67 trillion, of which N9.81 trillion—or 71.8%—was used solely to service debt.

When combined with personnel costs of N4.51 trillion for ministries, departments, agencies, and government-owned enterprises, total spending on debt and wages rose to N14.32 trillion. This figure exceeded the total revenue for the period, meaning debt and salaries alone accounted for approximately 105% of federal income, underscoring a severe strain on fiscal resources.

The shortfall in revenue was largely due to a sharp decline in oil earnings. Oil revenue totaled N4.64 trillion against a pro rata target of N12.25 trillion, a 62.2% deficit. While some non-oil tax revenues, including Value Added Tax (VAT) and Company Income Tax, slightly outperformed expectations, they were insufficient to offset the massive losses from the oil sector. Other revenue streams, such as customs duties and federation account levies, fell well below target.

Debt servicing exceeded budget projections, with domestic debt service at N4.65 trillion (10.9% above target) and foreign debt at N5.07 trillion (28.7% above target). By contrast, capital expenditure suffered a severe shortfall, with only N3.60 trillion spent out of a pro rata budget of N13.67 trillion—a 73.7% gap. This underfunding has constrained critical investments in infrastructure, education, and health.

The MTEF report notes that debt pressures continue to dominate Nigeria’s fiscal landscape, echoing 2024 trends where 77.5% of revenue was consumed by debt service. Analysts warn that without stronger revenue generation and tighter debt management, these fiscal pressures could further crowd out essential public spending, limiting Nigeria’s economic growth and development prospects.

source: nairametrics