Data from the Budget Office of the Federation for the first nine months of 2025 reveals a challenging fiscal reality for Nigeria: debt-related payments have significantly outpaced budget allocations, creating a "crowding out" effect on critical infrastructure spending.

Key Fiscal Performance Metrics (Jan–Sept 2025)

Major Findings

• High Debt-to-Revenue Ratio: Debt servicing consumed approximately 67.2% of the government's retained revenue. In practical terms, for every N100 the government earned, roughly N67 went to creditors, leaving only N33 for all other government functions, including salaries and capital projects.

• Infrastructure Deficit: The gap between borrowing and actual development is stark. Actual debt-related payments (N12.63tn) were more than four times the total capital expenditure (N3.10tn) for the same period.

• Revenue Shortfalls: The government struggled to meet its revenue targets, particularly in the oil sector, which fell short despite global price increases. Actual revenue (N18.63tn) performed at only 60.76% of the projected N30.67tn.

Proposed Solutions and Strategy

Finance Minister Taiwo Oyedele has acknowledged the fiscal pressure, noting that the administration is exploring options to:

• Refinance Expensive Debt: Capitalizing on current market conditions to swap high-interest obligations for more sustainable, lower-cost financing.

• Diversify Funding: Shifting focus from heavy borrowing toward concessionary loans and private-sector participation.

• Fiscal Reform: Leveraging ongoing tax reforms to bridge the deficit while cautioning that Nigeria can no longer rely primarily on borrowing to fund national development.

Expert Recommendations

Economists, including Dr. Aliyu Ilias and Dr. Muda Yusuf, have emphasized that the current trajectory is unsustainable. Their recommendations include:

1. Asset Disposal: Selling off underperforming public assets to generate immediate liquidity.

2. Public-Private Partnerships (PPP): Transferring feasible infrastructure projects from the federal budget to private investors.

3. Expenditure Rationalization: Reducing the Federal Government's footprint by delegating non-core responsibilities to state governments and focusing federal efforts on security, power, and major infrastructure.

4. Monetary Alignment: Better collaboration between fiscal and monetary authorities to manage interest rates on bonds and treasury instruments, which currently contribute to high domestic debt-servicing costs.