Nigeria’s fiscal deficit soared to N7.05 trillion by the end of the third quarter of 2024, as revealed by President Bola Tinubu during the presentation of the 2025 Budget of Restoration to the National Assembly on December 18, 2024. This widening gap underscores the government’s persistent reliance on borrowing to fund ambitious spending plans amid revenue shortfalls.
President Tinubu outlined a 2024 budget of N47.9 trillion, backed by a projected revenue of N34.8 trillion, leaving a fiscal deficit of N13.1 trillion—the largest in Nigeria’s history. The figures align with projections from the Medium-Term Expenditure Framework (MTEF) presented by the Finance Minister in November.
For the first nine months of 2024, the government generated N14.55 trillion in revenue, representing 75% of the annual target, while expenditures reached N21.60 trillion, or 85% of the planned spending. This shortfall of nearly N7 trillion highlights ongoing fiscal challenges.
President Tinubu acknowledged strides in addressing economic recovery and growth amid global and domestic pressures. However, persistent revenue underperformance accentuates the need for:
- Stronger fiscal discipline,
- Enhanced tax collection systems, and
- Alternative financing mechanisms to reduce dependency on debt.
Despite the fiscal challenges, the administration remains committed to driving growth through public investments in infrastructure, security, and human capital development. “We have improved revenue collection and fulfilled key obligations, with transformational effects gradually being felt across the economy,” Tinubu stated.
Key economic indicators
Despite the deficit, some macroeconomic indicators showed signs of recovery in 2024:
- GDP growth: The economy expanded by 3.46% in Q3 2024, up from 2.54% in Q3 2023.
- Foreign reserves: Increased to $42 billion, providing a buffer against external shocks.
- Trade surplus: Export growth raised Nigeria’s trade surplus to N5.8 trillion, according to the National Bureau of Statistics (NBS).
Fiscal responsibility concerns
The fiscal deficit of N7.05 trillion breaches the Fiscal Responsibility Act (FRA) of 2007, which limits the deficit to 3% of GDP. With the 2025 budget pegged at N47.90 trillion, the projected deficit for next year stands at N13.08 trillion, or 3.87% of estimated GDP, driven by:
- The implementation of a new minimum wage,
- Increased pension obligations,
- Other consequential adjustments, and
- Rising debt servicing costs.
The government has committed to reducing the deficit to FRA-compliant levels within the medium term.
The deficit is expected to be financed predominantly through domestic borrowing, given limited external financing options. However, this approach raises concerns about the sustainability of Nigeria’s debt profile.
As Nigeria prepares for a 2025 budget of N47.90 trillion, President Tinubu has reiterated his administration’s focus on achieving macroeconomic stability, reducing inflation, and fostering inclusive growth. However, the widening fiscal deficit remains a pressing challenge, underscoring the need for structural reforms, revenue diversification, and fiscal prudence to balance growth ambitions with sustainability.
