Nigeria’s fiscal position remains under severe pressure despite improved non-oil revenue performance, with debt servicing consuming 44.3 per cent of federal government revenue in the third quarter of 2025.
The Alliance for Economic Research and Ethics raised the concern in its assessment of the Federal Government’s 2025 Third Quarter Budget Implementation Report, released recently — eight months after the statutory deadline.
It noted in the review issued by its chairman, Dele Oye, that Nigeria’s growing non-oil revenue was being undermined by persistent oil-sector underperformance and a heavy debt burden that continues to constrain public investment.
“The debt service-to-revenue ratio remains the elephant in the room,” the group stressed.
According to the report, total debt service stood at ₦3.41 trillion in the third quarter of 2025 against total federal government revenue of ₦7.70 trillion, implying that nearly half of government earnings went into servicing debt obligations.
“This is not sustainable,” the group said. “It is a fiscal straitjacket that constrains the government’s ability to invest in the very infrastructure and human capital that could generate the inclusive growth Nigeria desperately needs.”
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The think tank noted that while non-oil revenue exceeded expectations during the quarter, aggregate federal revenue still fell short of projections because of weak oil earnings.
Non-oil revenue reached ₦5.25 trillion, driven by stronger collections from Value Added Tax, Company Income Tax, Electronic Money Transfer Levy and Independent Revenue.
However, total federal government revenue of ₦7.70 trillion was still 24.64 per cent below the quarterly target of ₦10.22 trillion.
The group attributed the shortfall largely to the oil sector, where revenue came in ₦2.80 trillion below target.
Oil production averaged 1.64 million barrels per day during the quarter, significantly below the budget benchmark of 2.12 million barrels per day.
The Alliance questioned the government’s repeated assurances that efforts to tackle crude oil theft and pipeline vandalism were yielding results.
“For years, the Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Petroleum Resources have made bold claims about targeting two million barrels per day and resolving crude oil theft,” it said.
Yet, the report noted that actual production has continued to hover below government projections.
“The gap between benchmark and actual production represents not merely a statistical deviation but a fiscal haemorrhage,” the group stated.
The assessment also raised concerns over capital spending, arguing that project implementation remained weak despite the government’s commitment to infrastructure development.
According to the report, ₦780.28 billion was released for capital projects in the third quarter under the government’s Bottom-Up Cash Plan framework.
However, the group said this represented only a fraction of what should have been released relative to the approved capital budget.
“This is not prioritising capital investment; it is capital starvation,” the report said.
The think tank argued that delays associated with the cash management framework were slowing project execution and increasing costs.
It also described the state of the Excess Crude Account as alarming, noting that the account’s balance stood at just $473,000 as of July 1, 2025, with no inflows or outflows recorded during the quarter.
“For a nation that once boasted an ECA balance of over US$20 billion, this is not merely depletion; it is fiscal extinction,” the group said.
While acknowledging that the eventual publication of the third-quarter budget implementation report was a positive step for transparency, the Alliance criticised the government for releasing the document about eight months after the statutory deadline.
“The eight-month delay in releasing this report is not a bureaucratic hiccup; it is a breach of statutory trust,” the group said.
The organisation urged the government to strengthen revenue generation, improve capital budget execution, pursue more concessional financing and adopt measures to reduce the debt-service burden.
It also called for stricter compliance with fiscal transparency requirements, including the timely publication of budget implementation reports and improved public disclosure of government finances.
Despite its criticisms, the group said the report showed that reforms to boost non-oil revenue collection were beginning to deliver results, providing a foundation for a more sustainable fiscal structure if properly managed.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X