The Nigerian federal government recorded a fiscal deficit of 2.66 trillion in the second quarter of 2025, according to the Budget Office of the Federation. This deficit was financed through domestic borrowing during the quarter. The total federal government revenue was 5.97 trillion, while expenditure reached 8.63 trillion, resulting in the deficit.
The Second Quarter and Half-Year 2025 Budget Implementation Report noted that the federal government prioritized non-discretionary expenditure despite poor revenue outcomes. Oil production averaged 1.68 million barrels per day, below the budget benchmark of 2.12 million barrels per day, which had revenue implications. Aggregate federal government revenue stood at 5.23 trillion, representing 58.45% of the prorated target between April and June 2025.
Oil revenue was 1.50 trillion, accounting for 28.50% of total revenues but fell short of the target by 71.50%. Non-oil revenue, however, stood at 3.73 trillion, representing 71.50% of total revenues, exceeding projections due to improved Company Income Tax, Value Added Tax, and Education Tax.
The report highlighted that aggregate expenditure, including Government-owned Enterprises and project-tied loans, stood at 8.63 trillion compared to a prorated 13.75 trillion. Capital releases to Ministries, Departments, and Agencies stood at 393.86 billion, while non-debt recurrent expenditure was 2.72 trillion in the second quarter. Debt service gulped 4.44 trillion, exceeding projections by 24.10%, driven by domestic debt obligations.
Minister of Budget and Economic Planning, Senator Abubakar Bagudu, stated that despite fiscal pressures, the government prioritized capital investment, emphasizing the need to strengthen domestic revenue mobilization and ensure fiscal sustainability. The economy recorded a real GDP growth of 4.23% in the review period, driven primarily by the services and non-oil sectors, while inflation remained elevated at 22.22%.
The report recommended aligning oil production assumptions with verifiable capacity, adopting conservative price benchmarks, and deepening compliance enforcement to build fiscal resilience. It also advocated for the institutionalization of value-for-money audits and prioritizing high-impact projects with measurable economic returns. The debt management regime should target a reduction in the debt service-to-revenue ratio to sustainable thresholds in 2025 through revenue growth and concessional financing strategies.