The Federal Government exceeded its 2024 borrowing target by ₦4.79tn, as a wider-than-expected budget deficit forced it to raise significantly more funds than originally projected.
According to the latest Fourth Quarter and Consolidated Budget Implementation Report for 2024 released by the Budget Office of the Federation, the Federal Government’s new borrowings rose to ₦12.62tn, representing a 61.2 per cent increase above the ₦7.83tn approved in the budget.
The increase in borrowing was largely driven by a significant revenue shortfall, which pushed the fiscal deficit to ₦13.51tn, compared with the approved deficit of ₦9.18tn.
The report showed that the Federal Government generated total revenue of ₦20.98tn during the year, falling ₦4.90tn short of the ₦25.88tn budget estimate.
Meanwhile, total expenditure stood at ₦34.49tn, only ₦561.29bn below the approved estimate of ₦35.06tn. This indicated that the wider fiscal gap was primarily caused by weaker-than-expected revenue rather than excessive spending.
The Budget Office stated that the Federal Government’s revenue and expenditure performance resulted in a fiscal deficit of ₦13.51tn in 2024, which was ₦4.34tn, or 47.33 per cent, higher than the projected budget deficit.
The deficit was also higher than the ₦10.55tn recorded in 2023, further highlighting the growing pressure on Nigeria’s public finances.
Foreign Borrowing, Budget Support Drive New Debt
An analysis of the Federal Government’s financing profile showed that domestic borrowing remained on target at ₦6.06tn. However, higher foreign borrowing and the introduction of budget support significantly increased total new borrowings.
Foreign borrowing rose to ₦3.37tn from the budgeted ₦1.77tn, representing an increase of ₦1.60tn.
The government also received ₦3.19tn in budget support, despite making no provision for such financing in the 2024 budget. The report did not disclose the source of the budget support, which was classified as new borrowing.
Combined, domestic borrowing, foreign borrowing and budget support brought total new borrowings to ₦12.62tn, exceeding the approved borrowing programme by ₦4.79tn.
The analysis further showed that new borrowings financed about 36 per cent of the Federal Government’s 2024 budget, underscoring the country’s continued dependence on debt to finance public expenditure.
In addition to the new borrowings, multilateral and bilateral project-tied loans amounted to ₦1.98tn, compared with the budget estimate of ₦1.05tn.
The government also failed to realise the ₦298.49bn expected from privatisation proceeds, as no revenue was recorded from that source during the fiscal year.
Oil Revenue Falls Short Despite Stronger Non-Oil Collections
The Budget Office attributed the wider financing gap largely to revenue underperformance.
Although total Federal Government revenue increased by ₦8.50tn, or 68.11 per cent, from ₦12.48tn in 2023 to ₦20.98tn in 2024, it still fell ₦4.89tn, or 18.92 per cent, below the annual budget target.
Oil revenue remained the major source of the shortfall. Gross oil revenue stood at ₦15.07tn, falling ₦4.93tn below the budget estimate of ₦19.99tn.
The report attributed the weaker oil revenue performance to lower crude oil prices and production levels. International crude oil prices averaged $74.65 per barrel during the fourth quarter, below the budget benchmark of $77.96 per barrel.
Average daily crude oil production was also recorded at 1.54 million barrels per day, below the budget assumption of 1.78 million barrels per day.
Non-oil revenue, however, performed better than expected. Gross non-oil revenue reached ₦16.09tn, exceeding the annual estimate of ₦10.81tn by ₦5.29tn, or 48.91 per cent.
The improved performance was driven largely by stronger collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.
Debt Service Rises as Expenditure Increases
Despite the revenue shortfall, government expenditure remained broadly in line with the approved budget.
Total expenditure stood at ₦34.49tn, just ₦561.29bn, or 1.6 per cent, below the budget estimate of ₦35.06tn.
Compared with 2023, however, expenditure increased by ₦11.45tn, or 49.7 per cent, from ₦23.04tn.
Non-debt recurrent expenditure amounted to ₦8.53tn, below the ₦11.27tn budget estimate. However, debt-related expenditure increased significantly during the year.
According to the report, total debt expenditure reached ₦12.36tn, exceeding the budgeted ₦8.27tn by 52.71 per cent.
The rising debt service burden further intensified pressure on government finances and limited the resources available for other areas of public spending.
Capital Expenditure Utilisation Remains Low
Amid mounting fiscal pressures, the Federal Government also faced challenges in funding and implementing capital projects.
The Budget Office disclosed that ₦5.81tn was released and cash-backed for capital projects and programmes during the 2024 fiscal year.
However, utilisation remained below the amount released. As of June 30, 2025, Ministries, Departments and Agencies had utilised ₦3.27tn, representing 81.91 per cent of the funds released and cash-backed.
Nigeria’s Public Debt Rises to ₦144.67tn
The report also highlighted the country’s rising debt burden, revealing that total public debt increased to ₦144.67tn as of December 2024.
The debt-to-GDP ratio rose to 61.22 per cent, exceeding Nigeria’s self-imposed threshold of 40 per cent and the international benchmark of 56 per cent for comparable economies.
The Budget Office, however, maintained that ongoing reforms targeting tax administration, non-oil revenue mobilisation, fiscal incentives, revenue leakages and remittances from government-owned enterprises would help reduce the country’s dependence on borrowing and improve fiscal sustainability over the medium term.
Economists Raise Concerns Over Rising Borrowing
The sharp increase in government borrowing has triggered concerns among economists and financial experts, particularly over its potential impact on inflation, debt servicing and the cost of living.
The Chief Executive Officer of CSA Advisory and development economist, Aliyu Ilias, warned that the rising debt burden could worsen existing macroeconomic challenges.
According to Ilias, borrowing can support economic growth when properly deployed, but the risks increase when a significant portion of government revenue is already committed to debt servicing.
He also warned that increased borrowing could inject additional liquidity into the economy and fuel inflationary pressures if the funds are not effectively managed.
Ilias stressed that the key issue was not borrowing itself but how borrowed funds were utilised. He urged the government to focus on increasing oil production and improving trade performance as alternatives to excessive borrowing.
Similarly, the Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr Olusegun Omisakin, said borrowing should not be judged solely by the size of a country’s debt.
He argued that the more important issue was the purpose for which borrowed funds were deployed, stressing that borrowing could be justified if it was invested in productive infrastructure capable of generating economic returns.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, also called for urgent measures to slow the growth of Nigeria’s debt profile.
Yusuf said Nigeria must develop strategies to keep its debt levels sustainable and reduce reliance on borrowing through stronger revenue mobilisation and fiscal discipline.
He noted that ongoing tax reforms could play an important role in easing pressure on government finances if effectively implemented.
Sanusi, Presidency Clash Over Rising Debt
Concerns over Nigeria’s rising debt burden have also triggered a public debate involving the Emir of Kano, Muhammadu Sanusi II, and the Presidency.
Sanusi, a former Governor of the Central Bank of Nigeria, questioned the Federal Government’s continued reliance on borrowing despite the removal of the petrol subsidy.
He warned that weak fiscal discipline could undermine the expected benefits of the government’s economic reforms.
The Presidency, however, defended the government’s borrowing strategy, arguing that the funds were being targeted at critical infrastructure and development projects.
Finance Minister Defends Government Borrowing
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has also defended the government’s borrowing strategy, arguing that the debate should focus on the purpose, cost and expected returns of borrowed funds rather than the amount alone.
Oyedele maintained that borrowing could be economically rational when used to finance productive assets that generate returns above the cost of capital.
However, the minister had previously warned that Nigeria could not continue to rely primarily on borrowing to finance development.
He stressed the need for the country to build a sustainable fiscal system capable of supporting critical sectors, including infrastructure, education, healthcare, security and social protection.
With new borrowings reaching ₦12.62tn in 2024 and public debt rising to ₦144.67tn, the debate over Nigeria’s borrowing strategy is likely to remain a major issue as the government seeks to balance infrastructure spending, economic growth and long-term debt sustainability.
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