Nigeria’s Debt Dilemma: How Revenue Shortfall Pushed 2024 Borrowing Beyond N12.6tn
By Matthew Eloyi
The Federal Government’s 2024 fiscal performance has exposed a growing challenge confronting Nigeria’s public finances: the widening gap between government spending ambitions and revenue realities.
A fresh report by the Budget Office of the Federation has revealed that the government borrowed N12.62tn in 2024, exceeding its approved borrowing target of N7.83tn by N4.79tn. The 61.2 per cent increase in borrowing was largely driven by a larger-than-anticipated budget deficit caused by revenue shortfalls.
The development highlights the persistent pressure on the government to finance critical obligations, sustain public services, and implement development programmes amid weaker-than-expected income from key revenue sources, particularly crude oil.
According to the Fourth Quarter and Consolidated Budget Implementation Report for 2024, the Federal Government recorded a fiscal deficit of N13.51tn during the year, far above the approved deficit projection of N9.18tn. The deficit was also significantly higher than the N10.55tn recorded in 2023, indicating increasing strain on the nation’s finances.
The report attributed the widening deficit mainly to poor revenue performance rather than excessive government spending. While total expenditure remained relatively close to the approved budget, revenue generation fell substantially below expectations.
The Federal Government generated N20.98tn in revenue during the year, representing an increase of N8.50tn compared with the N12.48tn recorded in 2023. However, the figure was still N4.90tn below the N25.88tn revenue target set in the 2024 budget.
Despite the revenue gap, government expenditure reached N34.49tn, only slightly below the approved expenditure benchmark of N35.06tn. This meant that the government had to rely heavily on borrowing to bridge the widening financial gap.
The financing structure showed that domestic borrowing remained within the approved limit, with the government raising N6.06tn locally. However, foreign borrowing and additional budget support significantly increased total borrowing.
Foreign borrowing rose to N3.37tn, exceeding the budgeted N1.77tn by N1.60tn. The government also received N3.19tn in budget support, despite no allocation for such financing in the original 2024 budget. The report classified the budget support as new borrowing, although it did not disclose its source.
Combined, domestic borrowing, foreign loans, and budget support pushed total new borrowings to N12.62tn, accounting for about 36 per cent of the Federal Government’s 2024 budget financing.
Beyond these borrowings, the country also secured N1.98tn in multilateral and bilateral project-tied loans, almost double the budget estimate of N1.05tn. Meanwhile, expected privatisation proceeds of N298.49bn failed to materialise, leaving another gap in government financing plans.
The government’s revenue challenge was largely linked to poor oil earnings. Although crude oil remains one of Nigeria’s major revenue sources, the sector underperformed against projections.
The report showed that gross oil revenue stood at N15.07tn, falling short of the N19.99tn budget estimate by N4.93tn. The weaker performance was attributed to lower crude oil prices and production levels.
During the fourth quarter of 2024, international crude oil prices averaged $74.65 per barrel, below the budget benchmark of $77.96 per barrel. Similarly, average daily crude oil production stood at 1.54 million barrels per day, below the projected 1.78 million barrels per day.
However, Nigeria’s non-oil sector provided some relief, exceeding expectations during the period. Gross non-oil revenue reached N16.09tn, surpassing the budget estimate of N10.81tn by N5.29tn.
The improved non-oil revenue performance was driven by stronger collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy, and Customs revenue.
Despite efforts to increase earnings from non-oil sources, the country’s dependence on borrowing remains a major concern for economic analysts, who have repeatedly warned about the implications of rising debt obligations on future budgets.
Debt servicing also emerged as a major pressure point in the 2024 fiscal year. The report revealed that government debt expenditure reached N12.36tn, exceeding the approved N8.27tn by N4.09tn, representing a 52.71 per cent increase.
The rising debt burden reduced the government’s fiscal flexibility, limiting its ability to allocate more resources to infrastructure, social programmes, and capital development.
Capital expenditure suffered amid competing demands on government resources. The report showed that only N5.81tn was released and cash-backed for capital projects during the year.
While the government recorded improvements in revenue compared with 2023, the figures indicate that Nigeria’s fiscal challenge remains unresolved. The country continues to grapple with the difficult balance of funding development needs, controlling deficits, and reducing reliance on borrowing.
For policymakers, the 2024 budget performance reinforces the urgency of expanding productive revenue sources, improving oil sector efficiency, strengthening tax administration, and ensuring that borrowed funds translate into economic growth.
As Nigeria moves forward, the central question remains whether increased borrowing will serve as a temporary bridge to recovery or become a permanent feature of government financing. The answer may depend on how effectively borrowed resources are deployed to stimulate productivity, create jobs, and strengthen the country’s economic foundation.