Nigeria’s fiscal deficit narrowed sharply to N330 billion in the third quarter of 2025, signalling an improvement in revenue performance and expenditure control amid ongoing fiscal pressures.
According to the latest Fiscal Performance Report released by the Budget Office of the Federation, the deficit recorded in Q3 2025 was significantly lower than both budget expectations and the figure recorded in the corresponding period of 2024.
The report showed that the Federal Government’s revenue and expenditure position resulted in a fiscal deficit of N330 billion, representing a reduction of N3.20 trillion or 90.68 per cent below the projected quarterly deficit of N3.53 trillion.
“The Q3 2025 fiscal deficit was also by far lower than the N3.17 trillion deficit recorded in the third quarter of 2024,” the Budget Office stated.
The data further indicated that the deficit-to-GDP ratio stood at 2.29 per cent, remaining within the 3 per cent threshold set by the Fiscal Responsibility Act and ECOWAS convergence criteria.
The improvement reflects a relatively stronger fiscal position during the quarter, supported by enhanced revenue mobilisation efforts and tighter expenditure management.
To finance the deficit, the Federal Government relied on a mix of funding sources, including domestic borrowing of N970 billion, privatisation proceeds amounting to N120.61 billion, and multilateral and bilateral project-tied loans totalling N3.13 trillion.
The Budget Office noted that the reduced deficit reflects improved fiscal discipline and ongoing efforts to strengthen public finance management.
In recent years, the Federal Government has intensified tax administration reforms and increased remittances from government-owned enterprises in a bid to boost non-oil revenue.
It also pointed to reforms aimed at reducing leakages in public finance systems, which have contributed to improved fiscal outcomes in the period under review.
However, concerns persist over rising debt service obligations, inflationary pressures, and continued reliance on borrowing to finance government spending.
Nigeria has struggled with persistent fiscal deficits over several years, largely driven by weak oil revenues, subsidy-related expenditures, rising recurrent costs, and foreign exchange pressures.
“In recent years, elevated debt servicing costs and revenue shortfalls have placed significant pressure on public finances,” the report noted.
The government has increasingly depended on both domestic and external borrowing to bridge fiscal gaps and fund infrastructure projects across the country.
According to earlier reports, Nigeria’s fiscal deficit surged to N13.51 trillion in 2024, exceeding budget targets and breaching the Fiscal Responsibility Act 2007 deficit-to-GDP limit.
The Federal Government also recorded N11.89 trillion in fresh borrowings in the first nine months of 2025, while capital expenditure stood at N3.10 trillion over the same period.
The loans comprised N7.08 trillion in domestic borrowing and N4.81 trillion in multilateral and bilateral project-tied financing.
Looking ahead, the government has increased its planned borrowing to N29.20 trillion for 2026, following an expansion in the proposed budget size and fiscal deficit projections.
Boluwatife Enome
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