FG Borrowing Increases By 61% To ₦12.62 Trillion Despite Revenue Shortfall

 

The Federal Government borrowed ₦12.62 trillion in 2024, exceeding the approved ₦7.83 trillion plan by ₦4.79 trillion, according to a Budget Office report.

According to the Budget Office, the fiscal deficit increased to ₦13.51 trillion due to revenue of ₦20.98 trillion, which was ₦4.90 trillion lower than the objective. Spending remained near ₦34.49 trillion.

Nigeria's total national debt is expected to reach ₦144.67 trillion by December 2024, with a debt service of ₦12.36 trillion. Experts and the Presidency have differed on the need for more borrowing.

The Federal Government exceeded its 2024 borrowing target by ₦4.79 trillion due to lower-than-expected revenue, resulting in higher debt levels.

According to KohlorsMedia, the Budget Office of the Federation released the Fourth Quarter and Consolidated Budget Implementation Report for 2024.

The Federal Government borrowed ₦12.62 trillion this year, a 61.2% increase from the approved borrowing target of ₦7.83 trillion.

Borrowing increased due to a larger fiscal deficit of ₦13.51 trillion, up from the expected ₦9.18 trillion in the 2024 budget.

The report stated that the growing deficit was mostly attributable by poor revenue performance, as government spending maintained generally within the approved budget.

Revenue falls by ₦4.9 trillion below target.

The Federal Government collected ₦20.98 trillion in income this year, falling ₦4.90 trillion shy of the ₦25.88 trillion objective.

Total expenditure was ₦34.49 trillion, just ₦561.29 billion less than the approved estimate of ₦35.06 trillion.

According to the Budget Office, the development demonstrated that the increase in the fiscal deficit was mostly due to a revenue shortage rather than excessive government spending.

The Federal Government's earnings and expenditure resulted in a fiscal imbalance of ₦13.51 trillion in 2024. "This was ₦4.34tn (47.33%) over the estimated budget deficit for the year," the study noted.

The deficit was greater than the ₦10.55tn recorded in 2023, indicating increased pressure on the country's governmental finances.

The government's funding profile maintained within the allocated budget of ₦6.06 trillion.

Foreign borrowing surged from expected ₦1.77tn to ₦3.37tn.

The government received ₦3.19 trillion in budget support, despite no provision for such finance in the approved 2024 budget.

Domestic borrowing, international borrowing, and budget support totaled ₦12.62 trillion, exceeding the planned borrowing program by ₦4.79 trillion.

The report also found that new debt was utilized to support around 36% of the Federal Government's total expenditure in 2024, demonstrating the country's persistent reliance on borrowing to fund public spending.

In addition, multilateral and bilateral project-tied loans totaled ₦1.98 trillion, nearly double the budgeted sum of ₦1.05 trillion.

The government projected to raise ₦298.49bn from privatization revenues, however no cash was generated through asset sales this year.

Oil Revenue Misses Target by ₦4.93 Trillion

The Budget Office ascribed a large portion of the financing gap on lower-than-expected oil revenues.

Gross oil revenue was ₦15.07 trillion, a ₦4.93 trillion decrease from the budget projection of ₦19.99 trillion.

According to the study, average crude oil prices were $74.65 per barrel, which was lower than the budget benchmark of $77.96 per barrel.

Oil production again fell short of forecasts, with an average daily output of 1.54 million barrels per day, compared to the budgeted figure of 1.78 million barrels.

However, non-oil revenue outperformed expectations.

Non-oil revenue reached ₦16.09 trillion, surpassing the budget projection of ₦10.81 trillion by ₦5.29 trillion. This is a 48.91 percent gain.

The increased performance was attributed to higher collections of Company Income Tax, Value Added Tax, Electronic Money Transfer Levy, and Customs income.

Debt servicing rises by 53%.

Although total government spending maintained roughly within the approved budget, debt payments placed significant strain on state finances.

The data shows that overall debt expenditure reached ₦12.36 trillion, above the ₦8.27 trillion projected for the year by 52.71%.

The study indicated that the overall debt expenditure for the year was ₦12.36 trillion, which was 52.71 percent higher than the planned ₦8.27 trillion.

Capital expenditure was also below projections.

According to the study, ₦5.81 trillion was granted and cash-backed for capital projects, but only ₦3.27 trillion was used by Ministries, Departments, and Agencies as of June 30, 2025.

Nigeria's debt reached ₦144.67 trillion.

By December 2024, the country's total public debt amounted to ₦144.67 trillion.

The increase raised Nigeria's debt-to-GDP ratio to 61.22 percent, exceeding the country's self-imposed barrier of 40% and the 56% benchmark usually used for comparable nations.

Despite the increased debt burden, the Budget Office is optimistic that continuing reforms would help reduce the government's reliance on borrowing in the longer run.

The agency identified enhanced tax administration, stronger mobilization of non-oil revenue, tighter fiscal incentives, decreased revenue leakages, and more remittances from government-owned firms as ways that may bolster the country's finances.

However, economic analysts have offered varying opinions on the Federal Government's expanding debt profile.

Aliyu Ilias, CEO of CSA Advisory, warned that increased borrowing might exacerbate inflation and the cost-of-living crisis if the borrowed funds were not invested properly.

"The fact is that it has both bad and beneficial effects. However, the bad impact is that we already have debt servicing concerns. Our budget requires approximately ₦15tn to service debt, and we are currently incurring additional expenses. The Sun reported what he said.

Ilias also stated that increasing borrowing could pump excess liquidity into the economy and promote inflation if the funds are not properly managed.

He insisted that the most significant problem was how the borrowed funds were used.

Dr Olusegun Omisakin, Chief Economist and Director of Research at the Nigerian Economic Summit Group, added that borrowing was not always the major issue.

He maintained that the government should be assessed on the results it obtained with borrowed funds.

"The problem is determining how we will spend the money. "If Nigeria borrows and you see the impact on infrastructure, no one will be concerned about the borrowing rate," he remarked.

Similarly, Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, encouraged the government to limit the rate of debt buildup while increasing revenue collection.

He claimed that doing so would assist lessen the country's reliance on borrowing to fund government activities.

and development projects.

The president defends borrowing.

According to Naija News, the current claim comes amid fresh debate about Nigeria's mounting debt burden as a result of recent confrontations between the Emir of Kano, Muhammadu Sanusi II, and the President.

While Sanusi questioned the need for ongoing borrowing following the elimination of the petrol subsidy, the Presidency justified the loans, claiming they were required to fund essential infrastructure projects.

Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, said that Nigeria's debt should not be addressed in isolation.

According to him, it is also important to consider what the borrowed money will be used for, the borrowing cost, and the expected return on investment.

"The key question is never simply how much debt you have. It is always debt for what and at what cost, against what return, and repayable under what terms? "A nation that borrows to finance productive assets that provide returns above the cost of capital is doing rationally," Oyedele stated.

He did, however, recognize that Nigeria could no longer rely primarily on borrowing to fund growth.

Oyedele stated that the country's economic framework must be strengthened and income collection improved in order to sustainably fund essential areas such as infrastructure, education, healthcare, security, and social protection.