FG Overshoots 2025 Borrowing Target By 55.6%, Risks Deepening Debt Trap

By FIDELUS ZWANSON

NIGERIA’S Federal Government (FG) has exceeded its 2025 borrowing target by ₦6.06 trillion, raising ₦17.36 trillion from domestic and foreign sources in the first ten months of the year—55.6 percent higher than the prorated limit of ₦10.9 trillion set in the Appropriation Act.

Data from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN) show that as of October 2025, domestic borrowings stood at ₦15.8 trillion, while external loans amounted to ₦1.56 trillion as of mid-year. The FG also recently announced plans to raise an additional $2.35 billion (₦3.38 trillion) through a Eurobond issuance, which could push total borrowing to about ₦20.7 trillion.

Based on current trends, total government borrowing for the year could reach ₦23 trillion, nearly ₦10 trillion above the full-year budgeted amount—an excess of roughly 80 percent.

Analysts Warn of Fiscal Indiscipline

Financial analysts have raised concerns that the government’s rising debt appetite amid weak revenue performance could trap the country in a self-perpetuating cycle of borrowing, discourage private investment, and undermine debt sustainability.

The 2025 budget projects ₦54.99 trillion in total spending and ₦41.91 trillion in revenue, leaving a ₦13.08 trillion deficit to be financed by domestic and foreign loans. However, borrowing has already far exceeded the planned pace.

Economist Andrew Uviase, Managing Partner at Ecovis OUC, described the trend as “a clear reflection of fiscal indiscipline and poor expenditure control,” stressing that excessive borrowing reflects a government “not bothered about its spending pattern.”

David Adonri, Vice Executive Chairman at Highcap Securities, attributed the surge to “unrealistic oil benchmarks” and “overly optimistic revenue assumptions.” He noted that the 2025 budget was based on an oil production target of 2.06 million barrels per day at $75 per barrel, while actual output has averaged between 1.6 and 1.7 million barrels, with prices closer to $65.

Similarly, Tunde Abidoye, Head of Research at FBNQuest Merchant Bank, warned that “excessive borrowing is a narcotic,” adding that high yields on government securities are crowding out private sector credit and stifling growth.

Breakdown of Borrowings

Between January and October 2025, the FG raised:

• ₦11.43 trillion through Treasury Bills (up 4.6% year-on-year).

• ₦4.04 trillion via FGN Bonds (down 22% YoY).

• ₦40.19 billion from FGN Savings Bonds (up 5.6% YoY).

• ₦300 billion through Sukuk Bonds (no issuance in 2024).

Impact on Private Sector and Economy

Experts caution that the FG’s growing reliance on domestic borrowing is tightening liquidity, raising interest rates, and crowding out private investment.

Adonri explained, “Excessive government demand for credit escalates the cost of funds. Lenders prefer risk-free government instruments over private ventures, weakening productive investment.”

Uviase added that such borrowing “drives banks to favour government lending over private credit,” potentially leading to a cycle where “new borrowing only serves to pay existing debts.”

Abidoye observed that the large volume of government securities “continues to put upward pressure on interest rates,” while Clifford Egbomeade, a public analyst, noted that this “provides short-term fiscal relief but worsens long-term debt vulnerability.”

Egbomeade highlighted that between January and August 2025, the CBN raised ₦26.4 trillion through Treasury Bills and OMO operations—a 57 percent increase year-on-year—absorbing much of the market’s liquidity.

IMF, World Bank Raise Red Flags

Analysts say the borrowing overshoot contradicts the Medium-Term Fiscal Framework (2025–2027), which aims to reduce the fiscal deficit to below 3 percent of GDP, and ignores repeated IMF and World Bank warnings about Nigeria’s unsustainable 83 percent debt-service-to-revenue ratio.

Adonri remarked that “the government is only paying lip service to fiscal consolidation,” while Egbomeade warned that overshooting the borrowing target “undermines macroeconomic credibility” despite modest gains such as GDP growth of 4.23 percent, easing inflation at 18 percent, and foreign reserves of $43 billion.

The Way Forward

Experts urge the FG to pursue fiscal discipline, spending cuts, and aggressive non-oil revenue mobilisation.

Adonri called for “reduction in government’s direct involvement in sectors better handled by the private sector,” and cautioned that over-taxation could “save a man from the lion only to deliver him to the shark.”

Abidoye recommended “tightening expenditure control, plugging leakages, and lowering the debt ceiling relative to revenue rather than GDP.”

Egbomeade advised shifting focus toward longer-tenor concessional external loans, while broadening the tax base through digital tax systems and informal-sector VAT coverage.

He concluded that Nigeria’s “debt-driven recovery can only become sustainable if anchored on disciplined spending, revenue reform, and credible fiscal consolidation.”