Explained: Why the Federal Government borrowed ₦12.62tn in 2024 and where the money came from

• The Federal Government borrowed ₦12.62 trillion in 2024, exceeding its original borrowing plan by ₦4.79 trillion due to a major revenue shortfall.

• Oil revenue missed target by almost ₦5 trillion, mainly because crude oil prices and production fell below budget projections.

• Non-oil tax collections performed strongly, driven by higher VAT, Company Income Tax, Customs revenue and the Electronic Money Transfer Levy.

• Nigeria's total public debt reached ₦144.67 trillion, while debt servicing cost ₦12.36 trillion, far above what was budgeted.

The Federal Government ended up borrowing ₦12.62 trillion in 2024 after government revenue came in far below expectations, forcing it to rely more heavily on debt to keep the country running.

Fresh figures from the Budget Office of the Federation's Fourth Quarter and Consolidated Budget Implementation Report for 2024 show that the government borrowed ₦4.79 trillion more than it originally planned, raising fresh concerns over Nigeria's rising debt profile and how the country is financing its annual budgets.

When President Bola Tinubu's administration presented the 2024 budget, the plan was to borrow ₦7.83 trillion to bridge the gap between government income and expenditure.

By the end of the year, however, total borrowing had climbed to ₦12.62 trillion, about 61.2% higher than what was approved.

The extra borrowing became necessary after revenues, especially from crude oil, failed to meet projections.

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The report shows the money came from three major sources:

• Domestic borrowing: ₦6.06 trillion

• Foreign borrowing: ₦3.37 trillion

• Budget support financing: ₦3.19 trillion

Interestingly, while domestic borrowing stayed within the approved limit, foreign borrowing almost doubled the initial projection.

The government also received ₦3.19 trillion in budget support financing, despite the fact that no provision for such funding existed in the approved 2024 budget.

According to the Budget Office, the deficit was financed through domestic borrowing, foreign borrowing, budget support financing and multilateral or bilateral project loans.

However, the report did not disclose the institutions that provided the budget support, leaving questions that may eventually require clarification from the Ministry of Finance or the Debt Management Office (DMO).

The answer is fairly straightforward.

Government income simply did not meet expectations, while spending remained almost exactly where it was planned.

The 2024 budget projected:

• Revenue: ₦25.88 trillion

• Expenditure: ₦35.06 trillion

What actually happened was:

• Revenue: ₦20.98 trillion

• Expenditure: ₦34.49 trillion

That means revenue missed the target by ₦4.90 trillion, while spending came in only ₦561.29 billion below budget.

As a result, the fiscal deficit widened from the planned ₦9.18 trillion to ₦13.51 trillion, making additional borrowing almost unavoidable.

A major reason for the revenue shortfall was weaker-than-expected oil earnings.

The government had expected to generate ₦19.99 trillion from oil revenue.

Instead, it realised only ₦15.07 trillion.

Two key factors contributed to the decline:

• Average crude oil price settled at $74.65 per barrel, below the budget benchmark of $77.96.

• Average daily crude oil production was 1.54 million barrels per day, lower than the projected 1.78 million barrels per day.

Nigeria has struggled with crude oil theft, pipeline vandalism and production challenges in recent years, making it difficult to consistently meet production targets.

There was at least one positive development.

Non-oil revenue exceeded expectations, reaching ₦16.09 trillion, compared to the projected ₦10.81 trillion.

According to the Budget Office, stronger collections came from:

• Company Income Tax (CIT)

• Value Added Tax (VAT)

• Electronic Money Transfer Levy (EMTL)

• Customs revenue

The improved tax performance reduced some of the pressure created by weaker oil earnings, although it wasn't enough to completely close the revenue gap.

Perhaps one of the biggest takeaways from the report is that roughly 36% of all Federal Government spending in 2024 was financed through borrowing.

In simple terms, more than one out of every three naira spent by the government last year came from loans rather than money earned during the year.

Borrowing money is one thing. Paying it back is another.

The 2024 budget set aside ₦8.27 trillion for debt servicing.

Actual spending on servicing existing debt rose to ₦12.36 trillion, exceeding the budget by 52.7%.

Higher debt servicing means less money is available for sectors like education, healthcare, infrastructure and other public services.

The report also showed that although ₦5.81 trillion was released for capital projects, only ₦3.27 trillion had been utilised, representing 81.91% of funds released as of June 30, 2025.

Nigeria's total public debt stood at ₦144.67 trillion by the end of 2024.

The Budget Office also estimated the country's debt-to-GDP ratio at 61.22%, above Nigeria's own benchmark of 40% and higher than the 56% level often referenced for comparable economies.

The report noted that these figures remain provisional because implementation of the capital budget has been extended through December 2025.

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Not necessarily. Economists say what matters most is what the borrowed money is used for.

If loans finance roads, rail, power projects, education, healthcare and investments that grow the economy, borrowing can support development.

But when debt mainly funds recurrent expenses without generating future revenue, repayment becomes more difficult and places additional pressure on future budgets.

The Budget Office says ongoing reforms, including stronger tax administration, improved non-oil revenue collection, tighter fiscal incentives and better remittances from government-owned enterprises, are expected to reduce Nigeria's dependence on borrowing over time.

For now, though, the numbers paint a familiar picture: when oil earnings disappoint, government borrowing rises, and Nigerians continue to hope the loans eventually translate into visible improvements in the economy.