The Federal Government exceeded its approved borrowing plan for 2024 after a wider-than-expected budget deficit forced it to secure far more loans than originally projected.
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The latest Fourth Quarter and Consolidated Budget Implementation Report for 2024 released by the Budget Office of the Federation showed that the government raised fresh debt of N12.62tn during the year. The figure was N4.79tn higher than the approved borrowing target of N7.83tn, representing an increase of about 61.2 per cent.
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The report attributed the higher borrowing mainly to lower government revenue, which widened the fiscal deficit beyond what had been planned in the national budget.
According to the report, the Federal Government generated total revenue of N20.98tn in 2024 against a projected N25.88tn, leaving a revenue gap of N4.90tn.
Government spending, however, remained largely within budget. Total expenditure stood at N34.49tn, only N561.29bn below the approved estimate of N35.06tn. As a result, the fiscal deficit climbed to N13.51tn, exceeding the approved deficit of N9.18tn by N4.34tn.
The Budget Office also noted that the 2024 deficit was higher than the N10.55tn recorded in 2023, reflecting increasing pressure on the country’s public finances.
A breakdown of the financing plan showed that domestic borrowing remained exactly as budgeted at N6.06tn. However, foreign borrowing increased sharply from the approved N1.77tn to N3.37tn.
In addition, the Federal Government obtained N3.19tn as budget support, even though no such funding was included in the original 2024 budget. The report classified the amount as new borrowing but did not identify its source.
Combined with domestic and foreign loans, the budget support raised total new borrowings to N12.62tn.
The report showed that the fresh loans financed about 36 per cent of the Federal Government’s total budget for the year, indicating that borrowing remained a major source of funding for public expenditure.
Apart from the new borrowing, project-tied loans from multilateral and bilateral institutions reached N1.98tn, exceeding the budget estimate of N1.05tn by N929.45bn.
The report also disclosed that expected proceeds of N298.49bn from privatisation did not materialise, as no revenue was generated from asset sales during the fiscal year.
According to the Budget Office, the widened fiscal deficit was financed through N1.98tn in multilateral and bilateral project loans, N6.06tn in domestic borrowing, N3.37tn in foreign borrowing and N3.19tn in budget support.
Despite missing its revenue target, total government income still improved compared with the previous year. Revenue rose from N12.48tn in 2023 to N20.98tn in 2024, representing an increase of N8.50tn or 68.11 per cent. However, collections remained almost 19 per cent below the approved budget target.
Oil earnings continued to fall below expectations. Gross oil revenue stood at N15.07tn, falling short of the projected N19.99tn by N4.93tn.
The Budget Office linked the weak oil performance to lower international crude oil prices and reduced production levels. Average crude oil prices during the fourth quarter stood at 74.65 dollars per barrel, below the budget benchmark of 77.96 dollars, while average daily oil production reached 1.54 million barrels, below the projected 1.78 million barrels per day.
In contrast, non-oil revenue performed better than expected. Gross non-oil revenue rose to N16.09tn, exceeding the budget estimate of N10.81tn by N5.29tn.
The increase was driven by stronger collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.
Government expenditure remained close to the approved budget despite the revenue shortfall. Total spending reached N34.49tn, representing a difference of just 1.6 per cent from the approved estimate.
Compared with 2023, however, total expenditure increased by N11.45tn, representing nearly 50 per cent growth.
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The report also showed that non-debt recurrent expenditure amounted to N8.53tn, lower than the approved estimate of N11.27tn.
Debt servicing consumed a much larger share of government resources during the year. Total debt service payments rose to N12.36tn, exceeding the budget estimate of N8.27tn by more than 52 per cent.
The government also struggled with capital project implementation. Although N5.81tn was released and cash-backed for capital projects during the year, only N3.27tn had been utilised by Ministries, Departments and Agencies as of June 30, 2025.
The report further revealed that Nigeria’s total public debt rose to N144.67tn at the end of December 2024.
As a result, the country’s debt-to-GDP ratio increased to 61.22 per cent, exceeding Nigeria’s own benchmark of 40 per cent as well as the 56 per cent threshold often used for comparable economies.
Despite the weaker fiscal performance, the Budget Office expressed optimism that ongoing reforms aimed at strengthening tax administration, increasing non-oil revenue, reviewing fiscal incentives, reducing revenue leakages and improving remittances from government-owned enterprises would reduce the country’s dependence on borrowing over time.
Development economist and Chief Executive Officer of CSA Advisory, Aliyu Ilias, said the rising level of borrowing could create fresh economic challenges if not properly managed.
According to him, while borrowing can support development, Nigeria already faces a heavy debt servicing burden, and additional borrowing could worsen inflation and increase the cost of living if excess liquidity enters the economy.
He added that the real issue is whether borrowed funds are invested in productive sectors capable of generating economic returns.
Ilias also advised the government to improve crude oil production and strengthen trade performance instead of relying heavily on loans to finance expenditure.
Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr Olusegun Omisakin, maintained that borrowing itself was not the major concern.
He argued that attention should instead focus on how the borrowed funds are utilised, noting that investments in productive infrastructure would make the level of borrowing less controversial.
Similarly, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said Nigeria must slow the growth of its debt and develop strategies that would keep public borrowing at sustainable levels.
He added that ongoing tax reforms could improve government revenue and reduce dependence on loans if fully implemented.
The country’s growing debt profile has also sparked public debate between the Emir of Kano, Muhammadu Sanusi II, and the Presidency.
Sanusi questioned the continued rise in government borrowing despite the removal of petrol subsidy, arguing that the savings from the subsidy should reduce the need for new loans.
The Presidency defended the borrowing programme, stating that the funds were being directed towards critical infrastructure projects.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, also defended government borrowing, maintaining that the focus should be on the purpose of the loans, their cost, expected returns and repayment terms rather than on the borrowing figures alone.
He has also maintained that Nigeria cannot continue financing development mainly through borrowing and must build a stronger fiscal system capable of supporting infrastructure, healthcare, education, security and social protection through sustainable revenue generation.
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