FG Borrowed N12.62tn in 2024, Exceeding Budget Target by 61% as Revenue Shortfall Worsened Deficit

The Federal Government exceeded its 2024 borrowing projection by almost ₦5tn after a sharp revenue shortfall widened the country’s fiscal deficit far beyond what had been anticipated in the national budget, according to the latest Budget Office implementation report.

The Fourth Quarter and Consolidated Budget Implementation Report for 2024 revealed that the government raised fresh borrowings amounting to ₦12.62tn, surpassing the approved borrowing target of ₦7.83tn by ₦4.79tn, representing an overshoot of 61.2 per cent.

The report attributed the higher borrowing requirement primarily to weaker-than-expected government revenue, which created a much larger financing gap despite public spending remaining largely within budget.

According to the Budget Office, the Federal Government ended the fiscal year with a deficit of ₦13.51tn, significantly above the approved deficit ceiling of ₦9.18tn.

“The revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N13.51tn in the 2024 fiscal year. This was N4.34tn (47.33 per cent) above the projected budget deficit estimate for the year.”

The report noted that the deficit also exceeded the ₦10.55tn recorded in 2023, underscoring mounting fiscal pressure on the country’s public finances.

Revenue Falls Short Despite Significant Growth

Although government revenue improved substantially compared to the previous year, it still failed to meet budget expectations.

Total revenue for the year stood at ₦20.98tn, representing an increase of ₦8.50tn, or 68.11 per cent, over the ₦12.48tn realised in 2023. However, this remained nearly ₦4.9tn below the ₦25.88tn projected in the budget.

It stated: “Total Revenue Inflow of the Federal Government stood at N20.98tn at the end of December 2024. This represents an N8.50tn (68.11 per cent) increase when compared to N12.48tn that was reported at the end of 2023, but N4.89tn (18.92 per cent) lower than the 2024 annual budget estimate.”

The report identified crude oil revenue as the weakest component of government earnings.

Gross oil revenue reached ₦15.07tn, falling ₦4.93tn short of the budget estimate of ₦19.99tn.

The Budget Office explained that lower international oil prices and production levels were responsible for the disappointing performance.

Average crude oil prices during the fourth quarter stood at $74.65 per barrel, below the budget benchmark of $77.96, while average daily production was 1.54 million barrels per day, considerably lower than the projected 1.78 million barrels per day.

In contrast, non-oil revenue outperformed expectations.

Collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue lifted gross non-oil revenue to ₦16.09tn, exceeding the budget estimate by ₦5.29tn, or almost 49 per cent.

Borrowing Driven by Foreign Loans and Budget Support

While domestic borrowing remained exactly in line with the approved budget at ₦6.06tn, the government significantly increased foreign borrowing and also relied on previously unplanned budget support.

Foreign borrowing rose from the approved ₦1.77tn to ₦3.37tn, while the government also obtained ₦3.19tn in budget support, despite making no provision for such financing in the 2024 budget.

The Budget Office did not disclose the source of the budget support, but classified it as fresh borrowing.

Together, domestic loans, foreign borrowings and budget support increased total borrowing to ₦12.62tn, accounting for roughly 36 per cent of total government expenditure during the year.

In addition, multilateral and bilateral project-tied loans amounted to ₦1.98tn, exceeding the budget estimate by more than ₦929bn.

The report also disclosed that the government failed to realise any revenue from expected privatisation proceeds estimated at ₦298.49bn.

According to the report: “The fiscal deficit was financed through multi-lateral/bilateral project-tied loans of N1.98tn, domestic borrowing of N6.06tn, foreign borrowing of N3.37tn and budget support of N3.19tn in the period under review.”

Spending Remained Largely Within Budget

Despite revenue challenges, government expenditure remained broadly consistent with the approved budget.

Total expenditure stood at ₦34.49tn, only ₦561.29bn below the budget estimate of ₦35.06tn.

However, spending still increased sharply compared to the previous year, rising by ₦11.45tn, or nearly 50 per cent, over the ₦23.04tn recorded in 2023.

The report also highlighted rising debt servicing obligations.

Debt expenditure climbed to ₦12.36tn, exceeding the budget provision of ₦8.27tn by more than 52 per cent.

It stated: “A total of N12.36tn was committed as total debt expenditure for the year, 52.71 per cent above the N8.27tn budgeted for the period.”

Capital project implementation also faced challenges.

Although ₦5.81tn was released and cash-backed for Ministries, Departments and Agencies (MDAs), actual utilisation lagged behind releases.

According to the Budget Office: “A total of N5.81tn was released and cash-backed to MDAs for their 2024 capital projects and programmes in 2024 fiscal year. Available fiscal data revealed that only N3.27tn (81.91 per cent) of the total amount released and cash-backed was utilized by MDAs.”

Debt Burden Continues to Rise

The report also painted a concerning picture of Nigeria’s growing public debt.

Total public debt climbed to ₦144.67tn as of December 2024, pushing the country’s debt-to-GDP ratio to 61.22 per cent.

According to the Budget Office:

“This translates to a net present value of total public debt/GDP ratio of 61.22 per cent as at the end of December, 2024. This is above the country’s threshold of 40 per cent and the international threshold of 56 per cent for comparator countries.”

Despite the deteriorating fiscal position, the Budget Office expressed confidence that ongoing reforms—including improved tax administration, stronger non-oil revenue mobilisation, elimination of revenue leakages and enhanced remittances from government-owned enterprises—would gradually reduce dependence on borrowing.

Economists Warn Over Rising Debt

Reacting to the report, development economist and Chief Executive Officer of CSA Advisory, Aliyu Ilias, warned that the increasing pace of government borrowing could worsen macroeconomic conditions if not carefully managed.

“The fact is that it has negative and positive impacts. But the negative impact is that we already have issues of debt service. You look at our budget, about N15tn is needed to service debt, and now we’re incurring more,” he said.

He also cautioned that excessive borrowing could fuel inflation.

“When you have more money in circulation, it depends on how we manage it. It can bring inflation, and when you have inflation, it will actually increase the cost of living,” he added.

According to Ilias, the critical issue is ensuring borrowed funds are invested in productive sectors capable of generating sustainable economic returns.

Similarly, the Chief Economist and Director of Research at the Nigerian Economic Summit Group, Dr. Olusegun Omisakin, argued that borrowing itself should not be the focus of public criticism.

“Without justifying borrowing, if you look at contemporary economies, you hardly see a significant difference in terms of borrowing levels. Nigeria is still relatively okay when you look at debt-to-GDP and debt-to-revenue indicators,” he said.

He, however, emphasised that the effectiveness of borrowed funds remained the real concern.

“The challenge is what we use the money for. If Nigeria borrows and you see the impact on infrastructure, nobody will really be concerned about the rate of borrowing.”

Also commenting, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, called for greater fiscal discipline and sustainable debt management.

“We need to work on the growth of our debt. We need to devise strategies to ensure that our debt levels are sustainable.”

He expressed optimism that recent tax reforms could help reduce future dependence on borrowing.

Borrowing Debate Intensifies

The country’s rising debt profile has continued to generate public debate.

Recently, the Emir of Kano, Muhammadu Sanusi II, questioned the Federal Government’s continued reliance on loans despite the removal of fuel subsidy.

“We’ve removed the subsidy. We’re now spending it. What we should not see is fiscal indiscipline. You cannot remove wastages and continue borrowing. If you’re not paying the subsidy and you’ve got the money, why are we still borrowing?” he asked during an interview on News Central TV.

The Presidency, through the Special Adviser on Policy Communication, Daniel Bwala, defended the borrowing strategy, insisting that the funds were being directed toward critical infrastructure projects.

Likewise, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, argued that government borrowing should be judged by its purpose rather than its size.

“When analysts go on TV and join the populist view to accuse the government of borrowing, you are doing a disservice. The relevant question is never simply how much debt. It is always debt for what and what cost, against what return, and repaid on what terms?

“A nation, a state, or a business that borrows to finance a productive asset generating returns above the cost of that capital is not behaving recklessly; it is behaving rationally.”

Nevertheless, the minister has also acknowledged that Nigeria cannot continue to depend primarily on debt to finance development.

“Nigeria cannot continue to finance development primarily through borrowing. We must build a fiscal system capable of sustainably supporting critical infrastructure, quality education, affordable healthcare, security, and social protection,” he said.