Nigeria’s federal government recorded a fiscal deficit of ₦2.66 trillion in the second quarter of 2025, underscoring continued pressure on public finances amid weak oil revenues and rising debt service costs. The shortfall, according to the Budget Office of the Federation, was financed entirely through domestic borrowing.
Data from the Second Quarter and Half-Year 2025 Budget Implementation Report show that total government revenue stood at ₦5.97 trillion, while expenditure climbed to ₦8.63 trillion during the period. Although the government met critical non-discretionary spending obligations, budget execution remained constrained by revenue underperformance, particularly from oil.
Oil production averaged 1.68 million barrels per day in Q2, well below the budget benchmark of 2.12 million barrels per day. As a result, oil revenue came in at ₦1.5 trillion, accounting for just 28.5 per cent of total revenue and missing its target by more than 70 per cent.
In contrast, non-oil revenue exceeded expectations, driven by improved collections from company income tax, VAT, electronic money transfer levy and education tax.
Expenditure pressures were amplified by rising debt service, which consumed ₦4.44 trillion in the quarter, about 24 per cent above projections, largely due to domestic debt obligations.
Capital releases to ministries and agencies stood at ₦393.86 billion, while non-debt recurrent spending amounted to ₦2.72 trillion.
Minister of Budget and Economic Planning, Senator Abubakar Bagudu, said the government remained focused on capital investment despite fiscal stress, noting that the economy grew by 4.23 per cent in real terms during the review period, led by the services and non-oil sectors.
Inflation, though still elevated, eased to 22.22 per cent, while external reserves declined to $37.82 billion.
The report acknowledged that oil revenue volatility continues to expose Nigeria’s finances to production and price shocks, while cash management bottlenecks have slowed project execution.
The 2025 budget, tagged the “Budget of Restoration: Securing Peace, Rebuilding Prosperity,” is designed to stabilise the economy and lay the groundwork for long-term growth under the Renewed Hope Agenda.
