Debt servicing and personnel costs have taken up more than the Federal Government’s total revenue in the first seven months of 2025, raising concerns about fiscal pressure, weak revenue performance and limited funding for capital projects. This is according to details contained in the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper released on Wednesday by the Budget Office of the Federation.
An analysis of the document shows that between January and July 2025, the Federal Government recorded aggregate revenue of N13.67 trillion, far below the pro rata target of N23.85 trillion for the period. This resulted in a revenue shortfall of N10.19 trillion, representing about 42.7 per cent below expectation.
The revenue performance contrasts with earlier public statements by President Bola Ahmed Tinubu, who said in September that Nigeria had already met its 2025 revenue target ahead of schedule and would no longer depend on borrowing to fund its budget. The President made the statement while receiving members of The Buhari Organisation at the Presidential Villa in Abuja. The delegation included former Nasarawa State Governor, Senator Tanko Al-Makura, and other leaders of the All Progressives Congress.
According to President Tinubu, the government’s non-oil revenue drive had generated enough income to meet projections by August, reducing Nigeria’s reliance on external borrowing. However, figures contained in the MTEF document do not support this claim, as they show that revenue challenges persisted during the period under review.
The document indicates that the revenue gap was driven mainly by weak oil receipts. Oil revenue for the first seven months of 2025 stood at N4.64 trillion, compared with a pro rata target of N12.25 trillion. This represents a shortfall of N7.62 trillion, or about 62.2 per cent. Dividends from entities such as Nigeria Liquefied Natural Gas and development finance institutions also fell short, with actual receipts of N104.64 billion against an expected N428.71 billion.
Some non-oil revenue lines performed better than projected. Company Income Tax collections for the Federal Government came in at N2.54 trillion, slightly above the pro rata estimate of N2.49 trillion. Value Added Tax also exceeded expectations, with the Federal Government’s share reaching N630.10 billion, compared with a target of N567.54 billion. Despite these gains, the document noted that the improvement in non-oil revenue was not sufficient to offset the sharp decline in oil income.
Customs revenue dropped to N988.29 billion, about 39.1 per cent below the N1.62 trillion pro rata target, while Federation Account levies fell sharply by 70.1 per cent to N75.08 billion. Other revenue sources, including the Nigeria Police Trust Fund levy and oil price royalty, also underperformed, with no inflow recorded from oil price royalty during the period.
On the expenditure side, the Federal Government spent N9.81 trillion on servicing domestic and external debts within the first seven months of 2025. Personnel costs for ministries, departments and agencies, as well as government-owned enterprises, amounted to N4.51 trillion. Combined, debt service and salaries totalled about N14.32 trillion, exceeding the N13.67 trillion revenue earned in the same period. This means that debt repayments and wages alone accounted for roughly 105 per cent of the Federal Government’s income.
The document further shows that debt service alone consumed about 71.8 per cent of total Federal Government revenue during the period. Domestic debt service stood at N4.65 trillion, above the N4.19 trillion pro rata figure, while foreign debt service rose to N5.07 trillion, significantly higher than the N3.94 trillion projection.
Total Federal Government expenditure, including spending by government-owned enterprises and project-tied loans, was N20.40 trillion, compared with a pro rata target of N32.08 trillion. While recurrent spending was largely kept in line with projections, capital expenditure suffered deep cuts. Aggregate capital spending for the first seven months was N3.60 trillion, far below the pro rata budget of N13.67 trillion.
Capital projects executed by ministries, departments and agencies were the most affected. Against a pro rata target of N10.81 trillion, MDAs received only N834.80 billion. Grants and donor-funded projects performed better, while spending on multilateral and bilateral project-tied loans stood at N1.68 trillion, slightly below target.
The Budget Office explained that weak capital releases were partly due to the extension of the 2024 budget. Following approval by the National Assembly, the implementation of the 2024 capital budget was extended to December 2025, allowing about N2.23 trillion of last year’s capital vote to be financed in 2025. As a result, new capital releases under the 2025 budget were managed cautiously in line with revenue performance.
The Federal Government has also directed MDAs to roll over 70 per cent of their 2025 capital budget into the 2026 fiscal year. This instruction was contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning. The circular stated that only 30 per cent of the 2025 capital budget would be released this year, while the remaining 70 per cent would form the base of the 2026 capital budget.
The directive has drawn mixed reactions from economists. Professor Sheriffdeen Tella of Olabisi Onabanjo University questioned the preparation of the 2026 budget when the implementation of the 2025 budget was still at an early stage. Similarly, the President of the Nigerian Economic Society, Professor Adeola Adenikinju, criticised delays in the budget cycle, saying they reduce predictability and weaken economic planning. On the other hand, Dr Muda Yusuf of the Centre for the Promotion of Private Enterprise supported the rollover decision, describing it as a practical step to restore credibility to the budgeting process.
