The Federal Government’s fiscal woes deepened further in January 2025, as debt servicing obligations outstripped retained revenue by a staggering margin, according to the latest data from the Central Bank of Nigeria.
The CBN’s January 2025 Monthly Economic Report revealed that the government spent N696.27bn on debt servicing during the month, compared to a total retained revenue of N483.47bn.
This means debt service alone consumed approximately 144 per cent of the government’s earnings, painting a grim picture of Nigeria’s worsening public finance crisis.
Despite slight gains in some revenue categories, the government’s earnings were grossly insufficient to cover debt obligations, forcing an even greater reliance on borrowing to meet basic commitments.
The report stated, “FGN retained revenue declined in the review period, owing largely to lower receipts from Federal Government Independent Revenue and FGN’s share of exchange gain.
At N0.48tn, provisional FGN retained revenue was 69.19 and 70.40 per cent below the levels recorded in the preceding period and monthly target, respectively.”
A closer analysis showed that revenue growth was virtually stagnant, posting only a marginal 0.89 per cent increase from N479.21bn recorded in January 2024. Yet, this slight uptick was overwhelmed by surging debt repayments.
Breakdown of the retained revenue indicated that the Federation Account contributed N167.69bn, while the VAT Pool Account added N90.73bn. Independent Revenue, which reflects the operational efficiency of Ministries, Departments, and Agencies, plunged drastically by 66.14 per cent year-on-year, falling from N95.34bn in January 2024 to N32.28bn.
Conversely, exchange gains provided some relief, rising by 35.6 per cent to N188.09bn compared to N138.67bn recorded in the same period last year.
However, revenues from Excess Crude oil sales and the ‘Others’ category failed to yield any inflows in January, despite prior projections, raising fresh concerns over Nigeria’s fragile revenue base.
Month-on-month data painted an even more worrying trend. In December 2024, retained revenue stood at N1.57tn, suggesting a sharp 69.19 per cent decline in January 2025.
While debt servicing in December accounted for 44.37 per cent of revenue, by January it had soared to 144 per cent, indicating a rapidly deteriorating fiscal position.
Although debt servicing costs fell slightly by 7.88 per cent from N755.86bn in January 2024, the Federal Government’s stagnant revenue growth meant that the debt-to-revenue ratio worsened significantly, edging the country closer to a debt trap.
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