Nigeria’s Federal Government is grappling with acute fiscal pressure as new data show that spending on salaries and debt servicing has outstripped total revenue, leaving little room for development expenditure.
According to figures drawn from the Medium-Term Expenditure Framework (MTEF), the combined cost of personnel expenses and debt service reached about ₦14.32 trillion in the first seven months of 2025, representing 105 per cent of total government revenue over the period.
The data indicate that debt servicing alone consumed approximately ₦9.81 trillion, accounting for 71.8 per cent of revenue. This figure exceeded budget projections by more than 17 per cent, a development largely attributed to the rising cost of servicing foreign-denominated loans amid exchange rate volatility.
Personnel costs for ministries, departments, and agencies (MDAs), as well as government-owned enterprises, stood at an estimated ₦4.51 trillion.
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The figures highlight a severe revenue shortfall. While the 2025 fiscal framework projected ambitious inflows of about ₦40.8 trillion for the full year, the Minister of Finance, Wale Edun, recently disclosed that actual receipts were far below expectations, with estimates of roughly ₦10.7 trillion likely to be realised.
Analysts attribute the gap to weak oil and non-oil revenue performance, underwhelming crude oil production, and persistent challenges in tax collection.
The consequences for public spending have been significant. With salaries and debt obligations classified as mandatory expenditures, the government has been forced to cut back on capital projects.
MDAs were reportedly directed to roll over about 70 per cent of their 2025 capital allocations into 2026 due to insufficient cash to fund infrastructure, health, education, and other development projects.
To bridge the widening gap, the government has continued to rely on borrowing, raising concerns about a potential debt trap in which rising debt service further constrains future budgets.
In response to mounting cash flow pressures, President Bola Tinubu has sought legislative approval to consolidate the 2024 and 2025 budgets as part of efforts to improve fiscal management.
Economists warn that without a substantial boost in revenue generation, Nigeria’s fiscal sustainability will remain under strain
