FG Exceeds 2024 Borrowing Target by ₦4.79tn as New Debt Financing Hits ₦12.62tn

FG Exceeds 2024 Borrowing Target by ₦4.79tn as New Debt Financing Hits ₦12.62tn

FG Exceeds 2024 Borrowing Target by ₦4.79tn as New Debt Hits ₦12.62tn

Nigeria’s Federal Government exceeded its 2024 borrowing target by ₦4.79tn as new borrowing reached ₦12.62tn amid revenue shortfalls and rising debt costs.

The Federal Government of Nigeria exceeded its 2024 borrowing target by ₦4.79 trillion after weaker-than-expected revenue widened the country’s fiscal deficit and increased the need for additional financing.

The latest figures contained in the 2024 Fourth Quarter and Consolidated Budget Implementation Report from the Budget Office of the Federation show that the Federal Government recorded new borrowings of ₦12.62 trillion during the fiscal year.

The amount was significantly higher than the ₦7.83 trillion borrowing target approved in the 2024 budget, representing an increase of about 61.2 per cent.

The development has renewed debate over Nigeria’s growing public debt, government revenue, debt servicing obligations and the sustainability of continued borrowing to finance public expenditure.

While government officials and some economists have argued that borrowing can support economic growth when funds are invested in productive infrastructure and projects, other analysts have warned that rising debt could increase fiscal pressure and worsen the cost of servicing government obligations.

Federal Government Borrowing Rises Above Budget Target

According to the Budget Office report, the Federal Government’s financing requirements increased considerably in 2024 after actual revenue fell short of expectations.

The government had projected new borrowing of ₦7.83 trillion for the year. However, actual new borrowing climbed to ₦12.62 trillion, leaving a financing gap of ₦4.79 trillion above the approved target.

The increase came as the Federal Government struggled to generate enough revenue to match its expenditure commitments.

The report put the Federal Government’s fiscal deficit at ₦13.51 trillion, compared with the approved deficit of ₦9.18 trillion.

This means the actual deficit was approximately ₦4.34 trillion, or 47.33 per cent, higher than the budget projection.

The situation highlights one of Nigeria’s most persistent fiscal challenges: government expenditure continues to place substantial pressure on public finances while revenue generation remains below the level required to comfortably finance spending.

Revenue Shortfall Drives Higher Borrowing

One of the major factors behind the increased borrowing was a significant revenue shortfall.

The Federal Government generated ₦20.98 trillion in revenue during 2024, compared with the budget estimate of ₦25.88 trillion.

That represents a shortfall of approximately ₦4.90 trillion.

However, the revenue figure still represented substantial growth compared with the previous year. The Budget Office said revenue increased by ₦8.50 trillion, or 68.11 per cent, from the ₦12.48 trillion recorded in 2023.

Despite the year-on-year improvement, the government still fell short of its 2024 revenue target by about 18.92 per cent.

The figures demonstrate that stronger revenue collection does not necessarily mean the government is generating enough funds to meet its expanding fiscal responsibilities.

Oil Revenue Remains a Major Weakness

Oil revenue continued to pose a major challenge for Nigeria’s finances.

Gross oil revenue was reported at approximately ₦15.07 trillion, which was about ₦4.93 trillion below the government’s budget estimate of ₦19.99 trillion.

The underperformance was linked to lower-than-expected crude oil prices and production.

According to the report, the average crude oil price during the fourth quarter was around $74.65 per barrel, below the budget benchmark of $77.96 per barrel.

Oil production also remained below the budget assumption.

Average daily crude oil production was approximately 1.54 million barrels per day, compared with the budget assumption of 1.78 million barrels per day.

For an economy that continues to depend heavily on petroleum revenues, weaker oil production and lower prices can quickly translate into reduced government income and increased pressure to borrow.

Non-Oil Revenue Performs Better Than Expected

While oil revenue disappointed, the Federal Government recorded a stronger performance from non-oil revenue sources.

Gross non-oil revenue reached approximately ₦16.09 trillion, exceeding the annual budget estimate of ₦10.81 trillion.

The figure represented an increase of approximately ₦5.29 trillion, or 48.91 per cent, over the budget projection.

The Budget Office attributed the stronger performance largely to improved collections from areas including Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.

The stronger non-oil revenue performance could become increasingly important as Nigeria seeks to reduce its dependence on crude oil and create a more diversified and sustainable fiscal system.

Domestic Borrowing Remained on Target

Interestingly, not every area of the government's financing programme exceeded expectations.

Domestic borrowing was recorded at ₦6.06 trillion, which was exactly the amount provided for in the 2024 budget.

The major increases came from foreign borrowing and additional budget support.

Foreign borrowing rose to approximately ₦3.37 trillion, compared with the budgeted ₦1.77 trillion.

That represents an increase of about ₦1.60 trillion above the original target.

The government also received approximately ₦3.19 trillion in budget support, even though no provision had been made for the financing in the original 2024 budget.

The report classified the budget support as new borrowing, although the source was not disclosed in the figures presented.

Together, domestic borrowing, foreign borrowing and budget support contributed to the total ₦12.62 trillion in new borrowing.

Government Spending Remains High

Despite the revenue shortfall, Federal Government expenditure remained relatively close to the approved budget.

Total expenditure stood at approximately ₦34.49 trillion, compared with the approved estimate of ₦35.06 trillion.

This was only about ₦561.29 billion, or 1.6 per cent, below the budget projection.

Compared with 2023, however, government expenditure increased substantially.

The report showed that expenditure rose from approximately ₦23.04 trillion in 2023 to ₦34.49 trillion in 2024, representing an increase of around ₦11.45 trillion, or 49.7 per cent.

This combination of rising expenditure and revenue that remained below target contributed significantly to the widening fiscal deficit.

Debt Service Becomes a Major Fiscal Pressure

Another concern highlighted by the report is Nigeria’s growing debt expenditure.

The Federal Government spent approximately ₦12.36 trillion on debt-related obligations during 2024.

That amount was significantly higher than the ₦8.27 trillion budgeted for debt expenditure, representing an increase of 52.71 per cent.

The rising cost of debt servicing is one of the key concerns surrounding Nigeria’s borrowing strategy.

As government borrowing increases, a larger share of public resources may have to be devoted to servicing existing obligations.

This can reduce the funds available for other important priorities, including infrastructure, healthcare, education, security and social programmes.

Capital Projects Face Implementation Challenges

The report also revealed challenges in the implementation of capital projects.

The Federal Government released and cash-backed approximately ₦5.81 trillion for capital projects and programmes during the 2024 fiscal year.

However, the Budget Office reported that Ministries, Departments and Agencies utilised approximately ₦3.27 trillion of the funds released and cash-backed.

The figures raise questions about the effectiveness of public spending and whether borrowed funds are being translated into completed infrastructure and other productive assets.

This issue is particularly important because government officials have repeatedly argued that borrowing can be justified when it finances projects capable of improving economic productivity and generating future returns.

Nigeria’s Public Debt Reaches ₦144.67tn

The Budget Office report also showed that Nigeria’s total public debt rose to approximately ₦144.67 trillion at the end of December 2024.

The debt-to-GDP ratio was reported at 61.22 per cent, exceeding Nigeria’s self-imposed threshold of 40 per cent and the cited international benchmark of 56 per cent for comparator economies.

The debt figure has intensified discussions about Nigeria’s fiscal sustainability.

However, economists have stressed that debt-to-GDP alone does not provide the complete picture.

The ability of a country to repay its obligations depends on several factors, including government revenue, economic growth, interest rates, the structure and maturity of debt, foreign exchange conditions and how borrowed funds are invested.

Economists Debate Whether Nigeria’s Borrowing Is Sustainable

The rise in borrowing has triggered different reactions from economists and policy analysts.

Development economist Aliyu Ilias warned that increased borrowing could create additional macroeconomic challenges, particularly if borrowed funds increase liquidity without generating sufficient economic output.

He argued that the government needs to pay close attention to debt servicing and inflationary pressures.

Another economist, Olusegun Omisakin, said borrowing itself should not necessarily be viewed as the main problem.

According to this argument, the more important question is what the government does with borrowed money.

If debt is used to finance productive infrastructure that strengthens economic activity, increases productivity and generates future revenue, borrowing can potentially support long-term growth.

However, borrowing becomes more concerning when it is primarily used to finance recurrent expenditure without creating assets or economic capacity capable of supporting future repayment.

Muda Yusuf Calls for Greater Fiscal Discipline

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, has also emphasised the importance of controlling Nigeria’s debt growth.

His position reflects a broader concern among economic stakeholders that Nigeria must improve domestic revenue mobilisation and fiscal discipline rather than depend excessively on loans.

The government has been pursuing tax reforms and other measures intended to increase revenue.

If successfully implemented, stronger domestic revenue could reduce the need for repeated borrowing and improve the country’s ability to finance infrastructure and essential public services.

Sanusi Raises Concerns Over Rising Borrowing

The issue has also featured prominently in public debate involving Muhammadu Sanusi II, the Emir of Kano and former Governor of the Central Bank of Nigeria.

Sanusi has questioned the continued reliance on borrowing following major reforms, including the removal of petrol subsidy.

His argument has focused on the need for greater fiscal discipline and better management of government resources.

The Presidency, however, has defended the government's borrowing strategy, arguing that financing is being directed toward critical infrastructure and national development priorities.

Finance Minister Taiwo Oyedele has similarly argued that the amount of debt alone should not determine whether borrowing is responsible.

The key considerations, according to the government's position, should include the purpose of the borrowing, the cost of the funds, expected returns and the terms under which the debt will be repaid.

Can Nigeria Reduce Its Dependence on Borrowing?

Reducing Nigeria’s reliance on debt will likely require a combination of stronger revenue collection, higher oil production, improved tax administration, better management of government-owned enterprises and tighter expenditure controls.

The country also needs to strengthen its non-oil economy.

The stronger-than-expected non-oil revenue recorded in 2024 demonstrates that there is significant potential outside the petroleum sector.

Improving the business environment, expanding formal economic activity and reducing revenue leakages could help broaden the government’s tax base.

At the same time, increased oil production and improved trade performance could strengthen foreign exchange earnings and government revenue.

What the ₦12.62tn Borrowing Means for Nigerians

For ordinary Nigerians, the debate over government borrowing goes beyond statistics.

Higher debt can affect government finances through increased debt service obligations.

If a significant portion of government revenue is used to service debt, fewer resources may remain for public infrastructure and essential services.

However, borrowing is not automatically harmful.

Debt can become economically beneficial when it is used transparently and efficiently to finance projects that improve productivity, create employment, strengthen infrastructure and generate additional economic activity.

The central issue is therefore value for money.

Nigerians will increasingly want to know whether borrowed funds are being converted into tangible development and whether the resulting economic gains will be sufficient to justify the cost of borrowing.

Conclusion: Nigeria Faces a Critical Fiscal Choice

The Federal Government’s decision to raise ₦12.62 trillion in new borrowings in 2024, exceeding its approved target by ₦4.79 trillion, underscores the scale of Nigeria’s fiscal challenge.

The major driver was not simply excessive government spending but a significant gap between projected and actual revenue.

Oil revenue underperformed, while non-oil revenue provided a stronger-than-expected contribution. At the same time, debt expenditure increased considerably, adding pressure to the government's finances.

The path forward will depend on how effectively Nigeria can strengthen revenue generation, control unnecessary expenditure and ensure that borrowed funds are invested in productive projects.

The government’s reforms may provide an opportunity to reduce dependence on borrowing, but their success will ultimately be measured by whether they produce stronger revenue, sustainable economic growth and improved living conditions.

For Nigerians, the most important question is no longer simply how much the government borrows.

The bigger question is what the borrowed money is used for, what Nigerians receive in return, and whether the country can comfortably repay the debt in the future.

>>> What do you think about Nigeria’s rising borrowing and public debt?

>>> Do you believe government borrowing can accelerate economic development when properly invested, or should the Federal Government focus more aggressively on reducing its dependence on debt? Share your thoughts in the comment section and follow MyInfoJet for more Nigerian business, political and economic news.

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