Nigeria’s Debt Soars as FG Overshoots 2025 Loan Target by 55%

The Federal Government (FG) has borrowed ₦17.36 trillion from both domestic and external sources in the first ten months of 2025 — ₦6.06 trillion or 55.6 percent higher than the ₦10.9 trillion borrowing benchmark set in the 2025 Appropriation Act on a prorated basis.

The total borrowing for the entire fiscal year, as approved in the 2025 budget, is ₦13.08 trillion.

According to data obtained from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN), the Federal Government raised ₦15.8 trillion from domestic investors as of October 2025 and ₦1.56 trillion from external sources in the first half of the year.

Last week, the FG also initiated plans to raise an additional $2.35 billion (₦3.38 trillion) through a Eurobond issuance, which would increase total borrowing to about ₦20.74 trillion.

If the current borrowing pace continues, analysts project that total borrowing for 2025 could hit ₦23 trillion — about ₦10 trillion (80%) above the amount approved in the Appropriation Act.

Analysts Warn of Fiscal Indiscipline, Rising Debt Risk

Financial analysts have expressed concern over the government’s persistent overshooting of borrowing targets, warning that it reflects fiscal indiscipline, weak revenue performance, and an increasing risk of a debt trap.

They noted that excessive domestic borrowing could erode investor confidence, crowd out private-sector credit, and worsen inflationary pressures.

Andrew Uviase, Managing Partner at Ecovis OUC, described the trend as “a clear reflection of fiscal indiscipline and poor expenditure control.”

“The government still needs to do more to reduce and control the cost of governance,” he said. “Without honesty and transparency, excessive borrowing will continue because money is never enough.”

He added that non-oil revenue remains below expectations due to insecurity and a sluggish non-oil sector, despite improved tax collections by the Federal Inland Revenue Service (FIRS).

David Adonri, Vice Executive Chairman of Highcap Securities Limited, blamed the surge on “aggressive and unrealistic revenue assumptions,” especially regarding oil.

“The 2025 budget projected 2.06 million barrels per day at $75 per barrel — both overly optimistic. Actual production has been around 1.6 to 1.7 million barrels, with prices closer to $65,” he said.
“Despite increased revenue claims from subsidy removals, government spending keeps expanding, making borrowing an addiction.”

Tunde Abidoye, Head of Research at FBNQuest Merchant Bank, agreed that optimistic oil benchmarks and persistent spending pressures have led to “revenue shortfalls and higher borrowing.”

Breakdown of Borrowings

Data from the DMO show that the FG borrowed ₦11.43 trillion in the first 10 months of 2025 through Treasury Bills, a 4.6% year-on-year increase from ₦10.93 trillion in the same period of 2024.

Borrowing through FGN Bonds fell by 22% year-on-year to ₦4.04 trillion, while FGN Savings Bonds rose by 5.6%to ₦40.19 billion. The government also issued ₦300 billion in Sukuk Bonds, compared with none in 2024.

Impact on Private Sector and Economy

Experts warn that excessive domestic borrowing is crowding out private sector credit and raising borrowing costs.

“Excessive government demand for credit pushes up yields and makes banks prefer risk-free government instruments to private lending,” said Adonri. “This discourages investment in the real economy.”

Uviase added that the government’s borrowing “starves the productive sector of capital” and could push Nigeria toward a cycle where new loans are merely used to service existing debts.

Abidoye noted that while high system liquidity has moderated interest rate spikes, “elevated yields on government securities continue to attract investor preference, reducing credit to private borrowers.”

Public finance analyst Clifford Egbomeade warned that “between January and August 2025, the CBN raised ₦26.4 trillion through Treasury Bills and OMO operations — up nearly 57% year-on-year — showing how much government borrowing is absorbing domestic liquidity.”

Conflict with Fiscal Framework and IMF Warnings

Analysts say the borrowing overshoot undermines Nigeria’s Medium-Term Fiscal Framework (2025–2027), which aims to reduce the deficit to below 3% of GDP.

The IMF and World Bank have repeatedly cautioned that Nigeria’s debt-service-to-revenue ratio, estimated at about 83% in 2024, is unsustainable.

“When government exceeds borrowing projections, it shows that expenditure is not under disciplined control,” said Uviase. “It can delay project execution and reduce investor confidence.”

Adonri added that “fiscal consolidation remains mere rhetoric as long as spending continues unchecked.”

Egbomeade warned that the borrowing pattern “directly conflicts with fiscal consolidation goals,” noting that despite modest macroeconomic gains — such as GDP growth of 4.23% in Q2 2025, inflation moderating to 18%, and reserves rising to $43 billion — the cost of governance has ballooned to ₦54.99 trillion.

Experts Recommend Reforms to Curb Excessive Borrowing

To stem the trend, analysts urged the FG to intensify non-oil revenue mobilization, cut wasteful expenditure, and rebalance borrowing toward concessional, long-term external financing.

Adonri advised the government to reduce its direct involvement in non-core economic sectors, while Abidoye emphasized the need for stricter spending controls.

“The government must trim wasteful expenditures and plug leakages,” Abidoye said. “The rising capital gains tax and higher minimum tax rates should improve revenue, but borrowing limits should be tied to revenue, not GDP.”

Egbomeade called for “aggressive digital tax collection and reduced recurrent spending,” adding that the Debt Management Office (DMO) should “rebalance borrowing toward longer-tenor, concessional external loans to ease refinancing pressure.”

He stressed that “sustained fiscal and revenue reforms are key to turning Nigeria’s debt-driven recovery into sustainable, investment-led growth.”