Nigeria recorded a widening fiscal deficit of N5.7 trillion in the first six months of 2025 as the West African nation’s expected revenue fell significantly below target, according to its newly released Budget Implementation Report (BIR).
Revenue for the first half of the year stood at N10.18 trillion. That’s about one-quarter of the total expected revenue for the year, estimated at more than N40 trillion.
“Revenue shortfalls persisted in oil receipts and non-oil revenues, respectively,” Abubakar Atiku Bagudu, minister for Budget and Planning, wrote in a foreword to the report.
Despite fiscal pressures, the government prioritised capital investment, highlighting the ongoing imperative to strengthen domestic revenue mobilisation and ensure fiscal sustainability.”
Africa’s biggest oil producer is gradually anchoring most of its revenue on non-oil sources, as it accounted for 81.7 percent of total revenue, exceeding targets and reaching N15.34 trillion between January and June 2025.
“Non-oil revenue growth validates recent administrative reforms — particularly in compliance enforcement, customs automation, and independent revenue remittance,” the report stated.
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This is as average crude oil production hovered around 1.60 mbpd and 1.68 mbpd, below the budget benchmark of 2.12 mbpd, with adverse implications for oil-related revenue inflows and external reserves accretion.
To finance its deficits, the government tapped domestic borrowing, leading to a debt service of N9.22 trillion for the reviewed period. That’s almost the entire revenue reported for the period, raising concerns over fiscal space for infrastructural spending.
“Debt service-to-revenue ratio remains elevated; fiscal space is constrained, requiring urgent revenue mobilisation and expenditure reprioritisation,” the BIR noted.
Nigeria is ramping up efforts to increase its revenue base, with the authorities rolling out bold reforms, including overhauling its tax laws to prevent leakages and ensure transparency.
The tax rules that will commence by January 2026 are expected to shoot up tax revenues as a percentage of the gross domestic product from a paltry 10 percent to about 18 percent in the next three years, effectively providing the fiscal space for more capital investments needed for its targeted 7 percent annual growth.
