Nigeria’s fiscal deficit reached N7.05 trillion by the end of the third quarter of 2024, according to figures disclosed by President Bola Ahmed Tinubu during his presentation of the 2025 Budget of Restoration to the National Assembly on December 18, 2024.
The deficit arises from the gap between the country’s total revenue and expenditure for the year so far, highlighting the government’s continued reliance on borrowing to bridge funding shortfalls amid ambitious spending plans.
The President also presented a budget of N47.9 trillion in 2024 backed by a revenue of N34.8 trillion suggesting a fiscal deficit of N13.1 trillion, a national record.
The budget figures are based on the Medium Term Expenditure Framework already presented in November by the finance minister.
Budget Performance Breakdown
President Tinubu revealed that N14.55 trillion in revenue had been generated as of Q3 2024, representing 75% of the annual target, while government expenditure for the same period stood at N21.60 trillion, accounting for 85% of the budgeted spend.
This discrepancy leaves a fiscal gap of approximately N7 trillion, further emphasizing Nigeria’s challenge in achieving a balanced budget amid persistent economic pressures.
The federal government planned for a budget of N35 trillion which is backed by a revenue of N25.8 trillion indicative of a budget deficit of N9.2 trillion.
Economic Context: The President acknowledged the efforts made in driving Nigeria’s recovery and economic growth following challenges in the global and domestic economic environment.
However, the revenue shortfall highlights the need for:
- Enhanced fiscal discipline,
- Improved tax revenue collection, and
- Alternative financing sources to reduce debt accumulation.
Government’s Response
The Tinubu administration remains focused on stimulating the economy through public investments.
The President noted that increased government spending in infrastructure, security, and human capital development was essential to fostering growth and recovery.
“While challenges persist, we improved revenue collection and fulfilled key obligations. The transformational effects of this on our economy are gradually being felt,” Tinubu stated.
The Bigger Picture: Despite the deficit, Nigeria’s macroeconomic indicators have shown gradual recovery in 2024:
- GDP Growth: The economy expanded by 3.46% in Q3 2024, compared to 2.54% in Q3 2023.
- Foreign Reserves: Currently stand at $42 billion, offering a buffer against external shocks.
- Trade Surplus: Rising exports pushed Nigeria’s trade surplus to N5.8 trillion, according to the National Bureau of Statistics (NBS).
- Budget in dollars: At N37.9 trillion the 2025 budget is estimated at about $31 billion (assuming an exchange rate of N1500/$1) compared to the 2024 budget of N35 trillion or $23 billion assuming the same exchange rate in 2024.
What next
With the 2025 budget set at N47.90 trillion, President Tinubu emphasized the administration’s commitment to achieving macroeconomic stability, reducing inflation, and fostering inclusive growth.
- However, fiscal sustainability remains a pressing concern as Nigeria navigates the balance between stimulating growth and managing debt burdens.
- Nigeria’s fiscal deficit of N7.05 trillion as of Q3 2024 raises concerns about adherence to the Fiscal Responsibility Act (FRA) of 2007, which caps the fiscal deficit at 3% of GDP.
- The widening deficit, driven by revenue shortfalls and rising expenditures, reflects the government’s push to stimulate growth through capital spending amidst economic challenges.
Meanwhile, according to the MTEF, the budget deficit is projected to be N13.08 trillion in 2025, from N9.18 trillion estimated for 2024.
- This represents about 38% of total FGN revenues and 3.87% of the estimated GDP. The deficit is due to the increased new minimum wage, pension obligation, other consequential adjustments, and increased debt costs.
- The government says it aims to lower the deficit levels to the threshold stipulated in the FRA 2025 within the medium term.
- The deficit will largely be financed by domestic borrowings, considering the narrow window for external
