Nigeria’s debt servicing burden remained significantly high in the first nine months of 2025, with the Federal Government spending a major share of its earnings on repaying existing debt obligations.
According to the 2025 Third Quarter Budget Implementation Report, total debt service stood at N12.52 trillion between January and September 2025, accounting for more than 67 percent of the government’s total retained revenue during the period.
The figures indicate that for every N100 earned by the Federal Government, over N67 was used to service debts, highlighting growing pressure on the nation’s public finances and limited fiscal flexibility.
Debt servicing remained one of the government’s largest expenditure obligations throughout the first three quarters of the year. In Q3 2025 alone, debt service amounted to N3.41 trillion, consuming about 44 percent of the quarter’s total revenue.
The report showed that domestic debt servicing for the nine-month period stood at N6.32 trillion, while external debt servicing accounted for N4.93 trillion. Within the third quarter alone, domestic debt service amounted to N1.80 trillion, while external debt service reached N1.69 trillion.
When compared with the net distributable revenue from the Federation Account Allocation Committee (FAAC), which stood at N10.29 trillion in Q3, debt servicing consumed more than 33 percent of available distributable revenue.
The data also reflects a relatively balanced repayment structure between domestic and external debt, despite domestic borrowing continuing to dominate Nigeria’s overall debt profile.
Meanwhile, government revenue performance remained weak during the period, largely due to underperforming oil earnings and customs revenue.
Total Federal Government revenue between January and September 2025 stood at N18.63 trillion, significantly below the prorated budget target of N30.67 trillion, leaving a revenue shortfall of N12.04 trillion.
In Q3 alone, total revenue stood at N7.70 trillion, falling 24.6 percent short of the projected N10.22 trillion.
Oil revenue contributed only N2.45 trillion during the quarter, representing 31.9 percent of total revenue and missing its target by more than 53 percent. Customs revenue also underperformed with a shortfall of N262.59 billion.
Average crude oil production stood at 1.64 million barrels per day, below the budget benchmark of 2.12 million barrels per day, while average crude oil prices during the quarter settled at $68.50 per barrel, lower than the projected benchmark of $75 per barrel.
The Budget Office attributed the weak oil performance to persistent crude theft, pipeline vandalism, production disruptions, and lower international crude oil prices.
Despite the weakness in oil earnings, non-oil revenue sources provided some relief for government finances.
Non-oil revenue rose to N5.25 trillion during the quarter, accounting for about 68 percent of total revenue. Gross non-oil revenue reached N6.52 trillion, exceeding quarterly budget estimates by N468.58 billion.
Company Income Tax collections stood at N3.06 trillion, surpassing projections by 31.19 percent, while Value Added Tax collections reached N2.28 trillion, outperforming targets by 21.74 percent.
Electronic Money Transfer Levy collections also exceeded expectations, generating N126.69 billion during the quarter.
Independent revenue remittances, grants, donor funding, and education tax collections also contributed positively to non-oil inflows, reflecting ongoing fiscal reforms aimed at broadening Nigeria’s revenue base and reducing dependence on crude oil earnings.
However, analysts have continued to express concern over the growing share of government revenue allocated to debt servicing, warning that it limits available resources for infrastructure, healthcare, education, and other capital projects.
In Q3 2025, total government spending stood at N8.03 trillion, significantly below the prorated budget of N13.75 trillion, representing an underspending of 41.57 percent.
The major expenditure items included N2.66 trillion for non-debt recurrent spending and N3.41 trillion for debt servicing, resulting in a fiscal deficit of N328.57 billion.
Nigeria’s total public debt stock rose to N153.29 trillion as of September 2025, with domestic debt accounting for 53.37 percent and external debt contributing 46.63 percent.
Higher domestic interest rates and elevated Treasury bill yields also pushed debt servicing costs upward during the period.
The Budget Office maintained that Nigeria’s core fiscal challenge remains weak revenue generation rather than debt sustainability alone.
With global oil prices still volatile and domestic oil production remaining below target, debt servicing is expected to remain a major pressure point on government finances unless revenue generation improves significantly over the medium term.
