FG exceeds budget limit, borrows ₦6 Trillion above 2025 fiscal target

The Federal Government has borrowed a staggering N17.36 trillion from both domestic and external sources within the first 10 months of 2025, far exceeding the N10.9 trillion projected under the year’s Appropriation Act for the same period.

This figure represents a 55.6% rise over the approved amount, pushing total borrowings close to N20.74 trillion when the recent move to secure a $2.35 billion Eurobond is factored in.

Analysts warn that this fiscal overshoot, driven by weak revenue and aggressive spending, risks plunging the country into a debt trap.

According to data from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN), the government raised N15.8 trillion domestically as of October and secured N1.56 trillion externally by midyear. Going by this trend, total borrowings for the year could hit nearly N23 trillion, about N10 trillion higher than the budgeted amount.

The 2025 budget set government expenditure at N54.99 trillion and revenue at N41.91 trillion, leaving a deficit of N13.08 trillion to be financed through borrowing. However, experts say the government’s borrowing spree is undermining fiscal discipline and threatening the private sector’s access to credit.

Financial analyst Andrew Uviase of Ecovis OUC described the situation as “a reflection of poor fiscal control,” saying, “The government is not showing any real intention to cut down the cost of governance. Without transparency, excessive borrowing will continue because money is never enough.”

Vice Executive Chairman of Highcap Securities, David Adonri, blamed the excessive debt on unrealistic oil projections in the 2025 budget, which assumed a daily production of 2.06 million barrels at $75 per barrel.

“Actual production has stayed between 1.6 and 1.7 million barrels, while oil prices have dropped to around $65,” he said.

“This addiction to debt shows a pattern of fiscal recklessness.”

Similarly, Tunde Abidoye of FBNQuest Merchant Bank noted that the government’s “optimistic oil benchmarks” and expanding spending profile are fueling the debt surge. Clifford Egbomeade, a public analyst, added that weak oil output and inflation-driven declines in VAT and company tax have forced the Treasury to borrow more from domestic markets.

Analysts also warn that massive government borrowing is crowding out private businesses.

“Banks prefer lending to government because it’s risk-free,” Uviase said.

“This starves manufacturers of credit and raises interest rates, worsening inflation.”

Adonri agreed, calling it “a vicious cycle where excessive government borrowing drives up yields, discourages investment, and limits productivity.”

Data from the CBN shows that between January and August 2025, the apex bank raised N26.4 trillion through Treasury Bills and OMO operations, 57% higher than last year, pushing debt servicing costs even higher.

Experts say the government’s debt appetite undermines the Medium-Term Fiscal Framework (2025–2027), which aims to reduce the deficit to below 3% of GDP.

They also cite IMF and World Bank warnings that Nigeria’s debt service-to-revenue ratio, estimated at 83% in 2024, remains unsustainable.

Egbomeade emphasized that the borrowing pattern “directly contradicts fiscal consolidation goals,” noting that despite some improvement in GDP growth and foreign reserves, “the ballooning cost of governance erases those gains.”

To restore balance, analysts urge the government to curb wasteful spending, enhance non-oil revenue, and restructure its debt.

Adonri advised cutting government involvement in sectors better managed by the private sector, while Abidoye called for “a stricter approach to plugging leakages and trimming excess expenditure.”

Egbomeade also urged the Debt Management Office to “shift toward longer-term, concessional external loans” and accelerate digital tax reforms to expand Nigeria’s revenue base.

“Borrowing is not inherently bad,” Uviase concluded, “but when it becomes habitual and unproductive, it mortgages the country’s future.”

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