Federal government posts ₦2.66 trillion Q2 deficit, highlighting revenue shortfalls and fiscal pressures.
The federal government posted a fiscal deficit of ₦2.66 trillion in the second quarter of 2025, according to the Budget Office of the Federation (BoF).
The deficit was largely financed through domestic borrowing.
The Second Quarter and Half-Year 2025 Budget Implementation Report shows that total federal revenue stood at ₦5.97 trillion, while expenditure peaked at ₦8.63 trillion, reflecting continued fiscal pressures despite ongoing efforts to meet key government obligations.
Oil production averaged 1.68 million barrels per day (mbpd), falling below the budget benchmark of 2.12 mbpd and contributing to a shortfall in oil revenue, which came in at ₦1.50 trillion, 28.5% of total revenue and 71.5% below target.
Non-oil revenue, however, performed strongly, reaching ₦8.90 trillion or 85.6% of total revenues, boosted by improved company income tax (CIT), value-added tax (VAT), education tax, and customs collections.
READ ALSO
- No Recruitment Ongoing, Beware of Fraudsters-NMDPRA
- Nigeria Cuts Oil Block Entry Fees, Opens 50 Fields
- CBN Allows Temporary Use of Expired NAFDAC Licenses to Ease Imports
Aggregate government expenditure, including Government-Owned Enterprises (GOEs) and project-linked loans, stood at ₦8.63 trillion, with capital releases of ₦393.86 billion and non-debt recurrent spending of ₦2.72 trillion. Debt servicing consumed ₦4.44 trillion, exceeding projections by 24.1% due to domestic obligations.
Senator Abubakar Bagudu, Minister of Budget and Economic Planning, highlighted that while fiscal pressures persist, the government continues to prioritise capital investment and revenue mobilisation to safeguard fiscal sustainability.
The report notes real GDP growth of 4.23%, driven by services and non-oil sectors, while inflation, though trending downward, remained elevated at 22.22%. External reserves dropped to $37.82 billion, exposing the economy to oil price and production volatility.
The BoF recommends aligning oil production targets with realistic capacity, adopting conservative price benchmarks, accelerating e-customs rollout, enforcing compliance, and rationalising tax incentives. It also advised prioritising high-impact projects, streamlining cash release mechanisms, and reducing the debt service-to-revenue ratio through revenue growth and concessional financing.
The 2025 budget, titled “Budget of Restoration: Securing Peace, Rebuilding Prosperity”, aims to stabilise the economy, improve living standards, and lay the foundation for long-term growth under the Renewed Hope Agenda.
About the Author
