The Federal Government recorded a fiscal deficit of N2.66tn in the second quarter of 2025 as total expenditure continued to exceed revenue, according to the Second Quarter and Half-Year Budget Implementation Report released by the Budget Office of the Federation (BoF).
The report showed that aggregate federal government revenue stood at N5.97tn during the quarter, while expenditure rose to N8.63tn, resulting in the deficit, which was financed largely through domestic borrowing.
According to the BoF, budget execution during the period remained under pressure due to weak, though gradually improving, revenue performance, even as the government continued to prioritise non-discretionary spending obligations.
Aggregate federally generated revenue between April and June 2025 amounted to N5.23tn, representing 58.45 per cent of the prorated target.
Oil revenue performance remained a major drag on fiscal outcomes.
The report disclosed that oil receipts stood at N1.50tn, accounting for 28.5 per cent of total revenue but falling short of the quarterly target by 71.5 per cent.
Average crude oil production during the period was 1.68 million barrels per day, significantly below the budget benchmark of 2.12 million barrels per day, with adverse implications for revenue.
In contrast, non-oil revenue exceeded expectations, supported by improved collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Education Tax (TETFund). Non-oil revenue was reported at N8.90tn, representing 85.6 per cent of total revenues and reflecting gains from enhanced compliance, customs automation and improved remittance of independent revenues.
On the expenditure side, aggregate spending, including Government-Owned Enterprises and project-tied loans, amounted to N8.63tn, compared with a prorated target of N13.75tn.
Capital releases to ministries, departments and agencies stood at N393.86bn, while non-debt recurrent expenditure was N2.72tn during the quarter.
Debt service remained a significant fiscal burden, consuming N4.44tn in Q2, which exceeded projections by 24.1 per cent.
The BoF attributed the overshoot largely to rising domestic debt obligations, further tightening the government’s fiscal space.
Minister of Budget and Economic Planning, Senator Abubakar Bagudu, said the government remained focused on sustaining capital investment despite mounting fiscal pressures.
He stressed the need to strengthen domestic revenue mobilisation and ensure long-term fiscal sustainability.
Bagudu noted that Nigeria’s economy recorded a real GDP growth rate of 4.23 per cent during the review period, driven mainly by the services and non-oil sectors.
He added that inflation, though still elevated, trended downward to 22.22 per cent, while external reserves declined to $37.82bn amid persistent revenue shortfalls.
The report highlighted continued volatility in oil revenues, noting that production and pricing shocks, as well as structural underperformance, continued to expose fiscal outcomes to downside risks.
While recent administrative reforms boosted non-oil revenue growth, the debt service-to-revenue ratio remained elevated, underscoring the urgency of revenue expansion and expenditure reprioritisation.
The BoF also identified cash management challenges, including delays arising from bottom-up cash planning, which slowed project execution and heightened the risk of cost overruns.
Among its recommendations, the report called for aligning oil production assumptions with verifiable capacity, adopting more conservative oil price benchmarks to build fiscal resilience, deepening tax compliance enforcement, rationalising tax expenditures and accelerating the rollout of e-customs.
It also advocated stronger independent revenue remittance, institutionalisation of value-for-money audits and prioritisation of high-impact projects with measurable economic returns.
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