Abuja, Dec. 18, 2025 (NAN) — Debt service and personnel costs have consumed more than the Federal Government’s total revenue in the first seven months of 2025, even as revenue fell sharply below targets and capital projects faced severe reductions.
An analysis of the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), released Wednesday by the Budget Office of the Federation, showed that from January to July, the Federal Government earned ₦13.67 trillion, against a pro-rata target of ₦23.85 trillion. This left a shortfall of ₦10.19 trillion, or about 42.7 per cent.
The report contrasts with President Bola Tinubu’s claim in September that Nigeria had met its 2025 revenue target by August and would not rely on borrowing to fund the budget.
The MTEF/FSP shows that the shortfall was largely due to a steep drop in oil revenues, which totaled ₦4.64 trillion, compared to a target of ₦12.25 trillion, representing a 62.2 per cent deficit. Dividends from state-owned entities, such as Nigeria Liquefied Natural Gas and development finance institutions, also underperformed, yielding only ₦104.64 billion against an expected ₦428.71 billion.
Some non-oil revenue streams performed better, with Company Income Tax collections reaching ₦2.54 trillion, slightly above the ₦2.49 trillion target, and Value Added Tax exceeding projections by 11 per cent. However, customs revenue fell 39.1 per cent, while Federation Account levies dropped by 70.1 per cent.
Meanwhile, debt service and personnel costs reached ₦14.32 trillion, slightly above the total revenue, with debt service alone consuming ₦9.81 trillion, or 71.8 per cent of government income. Combined with salaries of ₦4.51 trillion, these costs accounted for 105 per cent of total revenue.
Capital Budget Suffers Severe Cuts
The Federal Government spent ₦20.40 trillion in total over the period, falling 36.4 per cent short of the ₦32.08 trillion target. While recurrent expenditure was relatively on track at ₦15.68 trillion, capital spending collapsed, totaling ₦3.60 trillion against a pro-rata budget of ₦13.67 trillion, a shortfall of 73.7 per cent.
Most capital allocations for ministries, departments, and agencies (MDAs) were slashed, with only ₦834.80 billionreleased against a target of ₦10.81 trillion. Grants and donor-funded projects fared better, totaling ₦609.13 billion, while multilateral and bilateral project loans amounted to ₦1.68 trillion, slightly below expectations.
The Budget Office attributed the weak capital outturn to the extension of the 2024 budget, noting that ongoing projects were still financed under last year’s capital provisions. About ₦2.23 trillion of 2024 capital votes were carried into 2025, while new 2025 releases were cautiously managed based on revenue performance.
2026 Budget Preparations and Rollover of Capital Allocations
President Tinubu requested the National Assembly to consider the Appropriation, Repeal and Re-enactment Bill 2 of 2024, proposing total expenditure of ₦43.56 trillion for 2025. The measure seeks to end multiple overlapping budgets and improve capital budget execution.
Under the directive, MDAs must roll over 70 per cent of their 2025 capital budget into 2026, releasing only 30 per cent for the remainder of the fiscal year. Priority areas include national security, the economy, education, health, agriculture, infrastructure, power, energy, and social safety nets.
Economists criticized aspects of the 2026 budget process. Prof. Sheriffdeen Tella of Olabisi Onabanjo University said the budget was premature since the 2025 budget was barely implemented. Prof. Adeola Adenikinju, president of the Nigerian Economic Society, argued that late presentation undermines fiscal predictability.
By contrast, Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise, supported the rollover, saying it restores credibility to the budget process and prevents duplication of unimplemented allocations.
Babatunde Akinsola ✔
Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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