Nigeria’s fiscal deficit has ballooned to N7.05 trillion by the end of the third quarter of 2024, according to President Bola Ahmed Tinubu, who presented the 2025 Budget of Restoration to the National Assembly on December 18, 2024.
The deficit, a result of the gap between total revenue and expenditure, highlights the country’s continued reliance on borrowing to meet fiscal obligations amid ambitious government spending plans.
In his address, President Tinubu outlined a N47.9 trillion budget for 2024, backed by a projected revenue of N34.8 trillion, which would leave a record fiscal deficit of N13.1 trillion—marking a historic high for Nigeria. The figures were presented based on the Medium-Term Expenditure Framework (MTEF), which was discussed earlier in November by the finance minister.
As of the third quarter, Nigeria’s total revenue for 2024 reached N14.55 trillion, which is 75 per cent of the annual target. However, government expenditure for the same period stood at N21.6 trillion, 85 per cent of the total planned spending for the year. This discrepancy has left a fiscal gap of approximately N7 trillion, pointing to the ongoing challenge of balancing the country’s budget amidst growing expenditures.
The government initially projected a N35 trillion budget for 2024, with N25.8 trillion in expected revenue, resulting in a budget deficit of N9.2 trillion. However, the latest figures suggest a much larger shortfall.
During the presentation, President Tinubu acknowledged the efforts made to drive Nigeria’s recovery and economic growth, despite challenges such as fluctuating global oil prices and domestic economic pressures. He stressed that the revenue shortfall underlines the need for better fiscal discipline, tax reforms, and alternative funding sources to curb the rising debt.
“The government is committed to using public investments to stimulate growth,” Tinubu said. “While challenges remain, the positive impact of our improved revenue collection and key investments in infrastructure and human capital is becoming visible.”
Despite the deficit, some economic indicators showed positive trends in 2024. Nigeria’s economy grew by 3.46 per cent in Q3 2024, a notable improvement over the 2.54 per cent recorded in Q3 2023. Nigeria’s foreign reserves stood at $42 billion, providing a crucial buffer against external economic shocks. Rising exports contributed to a trade surplus of N5.8 trillion, according to the National Bureau of Statistics (NBS). The 2025 budget is estimated at N47.9 trillion (about $31 billion), a significant increase from the N35 trillion ($23 billion) budget for 2024.
President Tinubu reaffirmed his administration’s commitment to macroeconomic stability, reducing inflation, and promoting inclusive growth. However, fiscal sustainability remains a concern as the government balances the need for growth with the pressure of managing an expanding debt burden.
Looking ahead, the MTEF projects a N13.08 trillion deficit for 2025, a significant increase from the N9.18 trillion estimated for 2024. This represents about 38 per cent of total federal government revenues and 3.87 per cent of Nigeria’s projected GDP. The increase is largely driven by factors such as the new minimum wage, pension obligations, and rising debt servicing costs. The government aims to reduce the deficit to the threshold stipulated by the Fiscal Responsibility Act by 2025, through a combination of fiscal reforms and improved revenue generation. The deficit is expected to be financed mainly through domestic borrowing, as Nigeria faces limited external borrowing options due to a narrow fiscal space.
