Nigeria’s fiscal deficit rose sharply to N13.51 trillion in 2024, surpassing government projections and breaching the Fiscal Responsibility Act’s 3.0 percent ceiling. According to the Budget Office of the Federation, the fiscal gap represents 3.62 percent of the country’s Gross Domestic Product (GDP), signalling deeper financial strain on the economy.
In the 2024 Fiscal Framework, the government had estimated a quarterly deficit of N2.29 trillion, excluding spending by state-owned enterprises and project-tied loans. However, mounting fiscal pressures through the year pushed spending far beyond projections. In the fourth quarter alone, the deficit surged to N7.17 trillion, exceeding the prorated target by 212.68 percent.
“Overall, a total of N13.51 trillion deficit was recorded in 2024, representing a budget to GDP ratio of 3.62 percent, which is above the target rate of 3.0 percent as stipulated in the FRA 2007,” the Budget Office stated. The agency also disclosed that “the deficit was financed through N1.98 trillion Multi-lateral/Bilateral Project-tied Loan, N6.06 trillion Domestic Borrowing, N3.37 trillion Foreign Borrowing and N3.19 trillion Budget Support.”
The widening deficit comes amid sluggish revenue growth, persistent subsidy pressures, and weak oil output. Oil revenue, which traditionally anchors Nigeria’s budget, has been underperforming due to production challenges and fluctuating global prices. Meanwhile, the federal government has increased borrowing to sustain public spending and service existing debts.
Data from the Debt Management Office (DMO) show that Nigeria’s total public debt climbed to N152.40 trillion as of June 2025, up from N149.39 trillion in March. In dollar terms, the figure rose from $97.24 billion to $99.66 billion, underscoring the rising cost of debt repayment amid naira depreciation.
The International Monetary Fund (IMF) has warned that Nigeria’s consolidated fiscal deficit could expand further to 4.7 percent of GDP in 2025, citing reduced oil revenue, weaker capital expenditure, and elevated recurrent costs. The Fund also cautioned that continued reliance on borrowing could increase fiscal risks and erode investor confidence.
Economists say the widening fiscal gap has serious implications for growth. Heavy domestic borrowing, estimated at N6.06 trillion in 2024, may crowd out private investment by raising interest rates and limiting access to credit for businesses. This could slow job creation and economic recovery.
Moreover, with debt servicing costs consuming a large portion of government revenue, less funding is available for critical sectors such as infrastructure, healthcare, and education. This could further limit Nigeria’s ability to achieve sustainable development and poverty reduction targets.
Fiscal analysts have urged the government to improve revenue generation through tax reforms, broaden the non-oil revenue base, and curb recurrent expenditure. They also recommend prioritizing fiscal discipline and public sector efficiency to prevent long-term debt distress.
Nigeria’s expanding deficit reflects a broader struggle to balance spending needs with limited revenue sources. Unless urgent reforms are implemented, analysts warn, the country could face tougher borrowing conditions and slower economic growth in the years ahead.
