The Federal Government (FG) has borrowed N17.36 trillion from domestic and foreign sources in the first 10 months of this year.

This represents N6.06 trillion (55.6 per cent) in excess of the N10.9 trillion stipulated in the 2025 Appropriation Act on 10 months prorate bases. The total borrowing in 2025 approved budget is N13.08 trillion for the entire fiscal year.

The breakdown of the 2025 borrowings so far shows a N15.8 trillion from domestic sources as at October 2025 and N1.56 trillion from the external sources as at first half of 2025.

Meanwhile, the FG last week initiated moves to borrow $2.35 billion (N3.384 trillion) via the Eurobond issuance.

This would increase the total borrowing to N20.74 trillion.

Also, going by the periodic domestic borrowing template operated this year, the estimated total borrowing for the year is put at nearly N23 trillion, bringing total excess borrowing for the year to about N10 trillion, or 80% in excess of the amount in the Appropriation Act 2025.

Financial analysts warn that this persistent overshoot, amid weak revenue performance, heightens the risk of a self-reinforcing debt trap, erodes foreign investor confidence, and threatens private sector access to credit ? with knock-on effects on business expansion, job creation, and the general cost of living.

FG, in the Appropriation Act 2025, projected N54.99 trillion expenditure and N41.91 revenue. This resulted in a deficit of N13.08 trillion, which is to be financed through domestic and external borrowing.

Based on this, the borrowing target for the first ten months was N10.9 trillion, equivalent to N1.09 trillion monthly.

However, data from the Debt Management office, DMO, and the Central Bank of Nigeria, CBN, showed that the FG borrowed N15.8 trillion from domestic investors from January to October (10M?25) through monthly FGN Bond auctions, FGN Savings Bonds, Sukuk Bond and Treasury Bills.

Financial analysts pointed out that by overshooting its borrowing target amidst rising revenue, the FG is continuing with fiscal indiscipline which hallmarked the immediate past fiscal regime under late President Muhammadu Buhari.

They also said this development poses threat to private sector access to credit and economic growth and debt sustainability efforts.

The experts also warned that FG?s excessive borrowing undermines IMF-backed fiscal consolidation efforts.

Breakdown of borrowings

The breakdown of the FG borrowings so far this year show that it borrowed N11.43 trillion in 10M?25 through Treasury Bills (Primary Market Auctions), representing a 4.6 per cent, year-on-year, YoY, increase from N10.925 trillion in 10M?24.

The FG, however, reduced its borrowing through FGN Bonds by 22 per cent, YoY to N4.042 trillion in 10M?25 from N5.15 trillion in 10M?24.

But borrowing through the FGN Savings Bond auction rose by 5.6 per cent, YoY to N40.19 billion in 10M?25 from N38.06 billion in 10M?24.

Similarly, FG raised its borrowing through Sukuk Bond issuance to N300 billion in 10M?25 from zero issuance in 10M?24.

Why FG increased borrowing

Andrew Uviase, Managing Partner at Ecovis OUC, described the escalating borrowing as ?a clear reflection of fiscal indiscipline and poor expenditure control.?

According to him, ?the government still needs to do a lot more in reducing and controlling the cost of governance. The present situation suggests the government is not bothered about its spending pattern, and without honesty and transparency, we will continue to see excessive borrowing because, realistically, money is never enough.?

He also noted that non-oil revenue performance has remained disappointing, despite improvements in tax collection by the Federal Inland Revenue Service (FIRS).

?Other non-oil sources are not meeting expectations, and insecurity continues to stifle farming and other economic activities that could boost revenue,? he said.

David Adonri, Vice Executive Chairman of Highcap Securities, blamed the borrowing surge on ?aggressive and unrealistic revenue assumptions,? particularly oil-related.

?The 2025 budget was anchored on an oil production target of 2.06 million barrels per day and a price of $75 per barrel ? both overly optimistic,? he said. ?Actual production has hovered around 1.6 to 1.7 million barrels, while prices have fallen to about $65.?

Adonri warned that the Federal Government?s ?addiction to debt? and ?brazen fiscal indiscipline? continue to undermine fiscal consolidation. ?Despite claims of increased revenue from the removal of fuel and FX subsidies, government spending keeps expanding, and borrowing has become a narcotic,? he said.

Similarly, Tunde Abidoye, Head of Research at FBNQuest Merchant Bank, echoed Adonri?s view, describing the oil benchmarks in the 2025 budget as ?overly optimistic,? which he said inevitably leads to ?revenue shortfalls and higher borrowing.?

Clifford Egbomeade, a public analyst, attributed the borrowing overshoot to a combination of weak revenue and rising debt-service costs.

?Owing to oil production averaging 1.35?1.4 million barrels per day and inflation eroding consumption, VAT and company tax receipts fell below projections. This forced the Treasury to turn to the domestic market,? he explained.

Egbomeade added that ?double-digit yields of over 20% at bond auctions and the deferral of Eurobond issuance due to high global interest rates expanded the government?s cash needs, pushing it into reactive liquidity borrowing rather than strategic deficit management.?

Threat to the private sector, economic growth, and debt sustainability

The experts warn that the government?s excessive domestic borrowing is increasingly crowding out private sector credit, raising borrowing costs, and slowing productive investment.

David Adonri, said the government?s excessive demand for domestic credit continues to distort market pricing.

?The price of debt is determined by supply and demand. Excessive borrowing by the government escalates the cost of funds and crowds out the production sector,? he explained. ?Lenders prefer risk-free government instruments to private ventures, which discourages investment in the real economy,? he added.

Adonri described the situation as ?a vicious cycle where government debt appetite drives up yields, weakens private capital formation, and limits economic productivity.?

Andrew Uviase added: ?When the government borrows in an insatiable manner, banks and other financial institutions naturally favour the government because of the security of their loans. Private businesses will struggle to access credit, interest rates will rise, and the manufacturing and productive sectors will suffer.?

He warned that if unchecked, Nigeria could enter a cycle where ?new borrowing only serves to pay existing debts,? a development that would further weaken investor confidence and worsen inflationary pressures.

Tunde Abidoye, Head of Research at FBNQuest Merchant Bank, noted that the increased issuance of government securities has put upward pressure on interest rates.

?Higher paper supply should normally push rates up, but the impact has been somewhat moderated by high system liquidity,? he observed. ?Nonetheless, elevated yields on government paper continue to attract investor preference, making it harder for private borrowers to compete.?

Abidoye stressed that as yields remain high, banks will increasingly allocate funds to sovereign instruments, reducing credit flow to the real economy.

Egbomeade, described the surge in borrowing as a double-edged sword that provides temporary fiscal relief but worsens long-term debt vulnerability.

?Between January and August 2025, the CBN raised N26.4 trillion through Treasury Bills and OMO operations?up nearly 57 percent year-on-year?showing how much government borrowing is absorbing domestic liquidity,? he said.

?With OMO yields above 20 per cent and the Monetary Policy Rate at 27.5 percent, debt-servicing costs are rising faster than revenues. Banks and institutional investors now prefer high-yield government paper to business lending, starving the private sector of credit,? he added.

Egbomeade warned that while the strategy secures short-term funding, it ?weakens medium-term growth prospects and deepens debt-service vulnerabilities.?

Conflict with Fiscal framework, IMF warnings on debt service-to-revenue ratio

Analysts further warn that the borrowing overshoot directly conflicts with the fiscal-consolidation path outlined in the Medium-Term Fiscal Framework (2025?2027) , which aims to narrow the deficit to below 3 percent of GDP, and the IMF and World Bank?s repeated warnings about Nigeria?s rising debt-service-to-revenue ratio ? estimated at about 83 percent in 2024.

According to Andrew Uviase, Managing Partner, Ecovis OUC, ?When the Government exceeds its borrowing projections, it is a sign that expenditure is not under disciplined control. It could also lead to delays in project execution, which could reduce immediate financing needs.?

David Adonri, Vice Executive Chairman, Highcap Securities Limited, said the development shows that the government is only paying lip service to fiscal consolidation.

?I don?t think there is any serious intention to balance the budget. As long as fiscal indiscipline continues, the repeated warnings from the IMF and the World Bank will remain valid. The debt service ratio is still at an unsustainable level,? he said.

Clifford Egbomeade noted that the current borrowing pattern ?directly conflicts with fiscal consolidation goals.? He explained:

?The IMF and World Bank have repeatedly cautioned that Nigeria?s debt-service-to-revenue ratio, estimated at around 83 percent in 2024, is unsustainable without meaningful restraint on domestic borrowing. Overshooting the 2025 target by 45 percent contradicts the consolidation path outlined in the Medium-Term Fiscal Framework. Although macroeconomic indicators have improved ? GDP growth of 4.23 percent in Q2 2025, inflation moderating to 18 percent, and reserves rising to $43 billion ? these gains coexist with a widening fiscal gap as the cost of governance has ballooned to N54.99 trillion. The current borrowing pattern therefore undermines consolidation credibility.?

How to curb excessive borrowing

While warning that the current trend undermines Nigeria?s long-term debt sustainability and contradicts the by the International Monetary Fund, IMF for stronger revenue mobilisation, the experts urge the FG to deepen fiscal and tax reforms to reduce reliance on domestic borrowing.

David Adonri, said the government must cut its excessive involvement in sectors better managed by the private sector.

?The government is assuming several responsibilities it ought to allow the private sector handle. These drain public finances,? he said. ?Ending perennial deficit budgeting will strengthen the government?s balance sheet.?

Adonri noted that while the 2026 tax reforms may improve revenue, ?excessive taxation could backfire saving a man from the lion only to deliver him to the shark.?

While urging the FG to cut wasteful expenditures and plug leakages, Tunde Abidoye, stressed the need for a disciplined approach to public finance.

?The government has to adopt a more disciplined approach by trimming wasteful expenditures and plugging leakages,? he said.

While noting that the, ?The capital gains tax has doubled to 30%, and large firms will now pay a minimum effective tax rate of 15%. This should improve revenue,? he, however, urged the government to ?reduce the debt ceiling from 60% of GDP and instead benchmark against revenue,? noting that ?a 60% debt-to-revenue ratio is a real stress point.?

On his part, Clifford Egbomeade stressed the need for aggressive non-oil revenue mobilization and better spending efficiency.

?With a 93.7 million-barrel shortfall in oil output, the fiscal base is fragile. The government must fast-track digital tax collection, broaden VAT to informal commerce, and cut wasteful recurrent costs,? he said.

He advised the DMO to ?rebalance borrowing toward longer-tenor, concessional external loans to ease refinancing pressure,? adding that ?sustained revenue and expenditure reforms are key to turning Nigeria?s debt-driven recovery into sustainable, investment-led growth.? (Vanguard)

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