The Federal Government borrowed ₦12.62tn in 2024, exceeding its approved borrowing target by ₦4.79tn, after a larger-than-expected budget deficit forced it to raise additional funds, according to the latest Budget Office of the Federation report.
The Fourth Quarter and Consolidated Budget Implementation Report for 2024 showed that the government had initially planned to borrow ₦7.83tn, but eventually raised ₦12.62tn, representing a 61.2 per cent increase above the budgeted amount.
The report attributed the higher borrowing to weaker-than-expected revenue, which pushed the fiscal deficit to ₦13.51tn, compared to the approved deficit of ₦9.18tn.
Government revenue for the year stood at ₦20.98tn, falling short of the budget target of ₦25.88tn by ₦4.90tn. Total expenditure, however, reached ₦34.49tn, only slightly below the approved budget of ₦35.06tn, indicating that the widening deficit was mainly caused by lower revenue rather than increased spending.
The Budget Office stated that the 2024 fiscal deficit was 47.3 per cent higher than projected and also exceeded the ₦10.55tn deficit recorded in 2023.
A breakdown of the borrowing showed that domestic borrowing remained at the budgeted ₦6.06tn, while foreign borrowing rose to ₦3.37tn, exceeding its target by ₦1.60tn.
In addition, the government received ₦3.19tn in budget support, despite making no provision for such financing in the 2024 budget. The report did not disclose the source of the budget support.
Combined, domestic borrowing, foreign borrowing and budget support brought total new borrowings to ₦12.62tn, accounting for about 36 per cent of the 2024 budget.
The report also revealed that project-tied multilateral and bilateral loans stood at ₦1.98tn, while expected privatisation proceeds of ₦298.49bn were not realised.
Oil revenue remained below expectations, with gross oil earnings of ₦15.07tn, about ₦4.93tn below the budget estimate. The Budget Office blamed the shortfall on lower crude oil prices and production, which averaged 1.54 million barrels per day, below the budget target of 1.78 million barrels per day.
On the other hand, non-oil revenue outperformed projections, reaching ₦16.09tn, surpassing the budget estimate by nearly 49 per cent. Strong collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue contributed to the improved performance.
Although overall government spending remained close to the approved budget, debt servicing increased significantly. Debt-related expenditure rose to ₦12.36tn, exceeding the budgeted ₦8.27tn by 52.7 per cent.
Capital project implementation also fell short of expectations. While ₦5.81tn was released for capital projects, Ministries, Departments and Agencies utilised only ₦3.27tn, representing about 81.9 per cent of the cash-backed releases.
The report further showed that Nigeria’s total public debt climbed to ₦144.67tn by the end of December 2024, pushing the debt-to-GDP ratio to 61.22 per cent. According to the Budget Office, this exceeds both Nigeria’s internal benchmark of 40 per cent and the international reference threshold of 56 per cent for comparable economies.
Despite the rising debt profile, the Budget Office expressed optimism that ongoing reforms to improve tax collection, increase non-oil revenue, reduce leakages and strengthen remittances from government-owned enterprises would help reduce dependence on borrowing in the coming years.
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Economic experts, however, expressed concern over the growing debt burden. Development economist Aliyu Ilias warned that increased borrowing could worsen inflation and the cost of living if not properly managed, noting that Nigeria’s rising debt servicing obligations were becoming a major challenge.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, also urged the government to slow the pace of borrowing by strengthening revenue generation and maintaining fiscal discipline.
Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, defended government borrowing, arguing that the focus should be on how borrowed funds are used rather than the volume of debt.
He maintained that borrowing to finance productive investments that generate returns above their cost is a rational economic decision, but also acknowledged that Nigeria cannot continue to rely heavily on loans to fund development and must build a more sustainable fiscal system.
