The Federal Government of Nigeria spent N3.41 trillion servicing its debt obligations in the third quarter of 2025, according to the latest macroeconomic and financial analysis report released by the Budget Office of the Federation. This figure underscores the growing burden of debt repayments on public finances, even as the government recorded a significantly lower fiscal deficit during the period.
Debt Servicing Falls Below Projection
The Budget Office disclosed that total debt service payments stood at N3.41 trillion in Q3 2025, representing N171.9 billion, or 4.8 percent, below the projected N3.58 trillion for the quarter. A breakdown of the figures showed that domestic debt servicing exceeded expectations. While N1.8 trillion had been budgeted for domestic obligations, actual spending was N111.07 billion higher than projected. In contrast, external debt servicing, including repayments to foreign creditors such as China and multilateral institutions, stood at N1.69 trillion. This was N211.72 billion, or 12.55 percent, below the projected amount.
Government Spending Declines
The report also revealed that total federal government expenditure in the third quarter was N8.03 trillion. This represented a sharp decline of N5.71 trillion, or 41.57 percent, compared with the prorated quarterly budget estimate of N13.75 trillion. However, spending remained higher than the corresponding period of 2024, increasing by N390 billion, or 4.86 percent, from N7.64 trillion recorded a year earlier. Non-debt recurrent expenditure accounted for N2.66 trillion during the quarter. Although this was 21.75 percent below projections, it represented a 31.2 percent increase compared to the same period in 2024.
Fiscal Deficit Narrows Sharply
Nigeria's fiscal deficit for Q3 2025 stood at N330 billion, far below the projected N3.53 trillion deficit. According to the Budget Office, the deficit was reduced by more than 90 percent from the expected level and was also significantly lower than the N3.17 trillion deficit recorded in the third quarter of 2024. The report noted that the deficit-to-GDP ratio was 2.29 percent, remaining within the three percent threshold required under ECOWAS convergence criteria. Officials said the shortfall was financed through privatisation proceeds and domestic borrowing.
World Bank Cancels $718 Million Loan
The latest debt figures emerged as the World Bank and the Nigerian government agreed to cancel a $718 million loan request that formed part of a broader $1.52 billion funding package intended to support reforms in Nigeria's power sector. According to the World Bank, the cancellation followed changes in macroeconomic conditions affecting the electricity sector, raising fresh questions about future funding plans for critical power infrastructure projects.
10 African Countries with Lowest IMF Debt
Legit.ng earlier reported that as many African economies grapple with mounting debt, high inflation, currency depreciation, and tighter global borrowing conditions, a handful of countries stand out for a different reason: they owe relatively little to the International Monetary Fund (IMF). With debt sustainability becoming a major concern across the continent, countries with lower IMF obligations are gaining greater flexibility to fund development projects, strengthen public services, and navigate economic uncertainty without the heavy burden of loan repayments. According to the latest IMF data released on May 28, 2026, several African nations currently maintain some of the lowest outstanding debt balances to the global lender.
