The federal government recorded a fiscal shortfall of ₦2.66 trillion in the second quarter of the year, the Budget Office of the Federation (BoF) has disclosed.
Figures in the Second Quarter and Half-Year 2025 Budget Implementation Report (BIR) released by the BoF show that the gap was covered through domestic borrowing during the period.
Government earnings for the quarter stood at ₦5.97 trillion, while spending rose to ₦8.63 trillion, creating the deficit.
The report explained that the federal government continued to meet its non-discretionary spending obligations, even though budget implementation was constrained by weak—though gradually improving—revenue performance.
During Q2, average oil output was 1.68 million barrels per day, falling short of the budget benchmark of 2.12 mbpd, with negative implications for revenue.
Aggregate FGN revenue between April and June 2025 amounted to ₦5.23 trillion, representing 58.45 per cent of the prorated target.
Oil receipts came in at ₦1.50 trillion, accounting for 28.50 per cent of total revenue but underperforming the target by 71.50 per cent.
By contrast, non-oil revenue reached ₦8.90 trillion, contributing 85.60 per cent of total income and surpassing projections due to stronger collections from CIT, VAT, EMTL and Education Tax (TETFUND).
On the spending side, total expenditure—including Government-Owned Enterprises (GOEs) and project-tied loans—stood at ₦8.63 trillion, compared with a prorated benchmark of ₦13.75 trillion.
Capital releases to MDAs were ₦393.86 billion, while non-debt recurrent spending totalled ₦2.72 trillion in Q2.
Debt servicing consumed ₦4.44 trillion, exceeding projections by 24.10 per cent, largely due to domestic debt obligations.
Minister of Budget and Economic Planning, Senator Abubakar Bagudu, said that despite mounting fiscal pressures, the government sustained capital investment, stressing the need to strengthen domestic revenue mobilisation and safeguard fiscal sustainability.
Bagudu noted that the economy posted real GDP growth of 4.23 per cent during the review period, driven mainly by the services and non-oil sectors. Inflation, though still high, eased to 22.22 per cent, while external reserves declined to $37.82 billion amid continued revenue weaknesses in both oil and non-oil streams.
He added that ongoing volatility in oil revenue continued to expose public finances to production and price shocks, compounded by structural underperformance and lower global prices.
According to him, the strong showing of non-oil revenues reflects the impact of recent administrative reforms, particularly in compliance enforcement, customs automation and independent revenue remittances.
However, the report warned that the debt service-to-revenue ratio remains high, leaving limited fiscal space and underscoring the need for urgent revenue expansion and spending reprioritisation.
It also acknowledged that cash management challenges—such as delays arising from bottom-up cash planning—have slowed project execution and increased cost risks.
Among its recommendations, the report urged closer alignment of oil production assumptions with verifiable capacity, adoption of conservative oil price benchmarks to strengthen resilience against external shocks, deeper compliance enforcement, rationalisation of tax expenditures, faster rollout of e-customs, and improved remittance of independent revenues.
It further called for institutionalising value-for-money audits and prioritising high-impact projects with clear economic returns.
The report added that the debt management framework should aim to reduce the debt service-to-revenue ratio to sustainable levels in 2025 through revenue growth and concessional financing, while also streamlining cash release processes to enhance predictability and project delivery.
The 2025 budget, titled “Budget of Restoration: Securing Peace, Rebuilding Prosperity,” is focused on economic stabilisation, improving livelihoods and laying the groundwork for long-term growth under the Renewed Hope Agenda.