Nigeria Spent N3.41 Trillion on Debt Servicing in Q3 2025, Deficit Drops Sharply
By Aboki Forex —
The Federal Government spent N3.41 trillion servicing its debt in the third quarter of 2025, according to the Budget Office of the Federation. This figure was 4.8% below the N3.58 trillion projected for the quarter, but it still underlines the heavy burden of debt repayments on public finances.
Domestic debt servicing exceeded expectations. The government spent N111.07 billion more than the N1.8 trillion budgeted for local obligations. External debt servicing, including payments to China and multilateral lenders, stood at N1.69 trillion. That was N211.72 billion, or 12.55%, below projections.
Total federal government expenditure in Q3 2025 was N8.03 trillion. This was a sharp drop of 41.57% from the prorated quarterly budget estimate of N13.75 trillion. However, spending still rose by 4.86% compared to the N7.64 trillion recorded in the same period of 2024.
Non-debt recurrent expenditure accounted for N2.66 trillion. That was 21.75% below projections but 31.2% higher than in Q3 2024.
Nigeria’s fiscal deficit for the quarter was N330 billion, far below the projected N3.53 trillion. The deficit was over 90% lower than expected and also significantly lower than the N3.17 trillion deficit recorded in Q3 2024. The deficit-to-GDP ratio stood at 2.29%, within the ECOWAS three per cent threshold. Officials said the shortfall was financed through privatisation proceeds and domestic borrowing.
Meanwhile, the World Bank and the Nigerian government agreed to cancel a $718 million loan request. The loan was part of a $1.52 billion package meant to support power sector reforms. The World Bank cited changes in macroeconomic conditions affecting the electricity sector as the reason for the cancellation. This raises fresh questions about funding for critical power infrastructure projects.
Nigeria’s debt situation comes as many African economies struggle with high debt, inflation, and currency depreciation. A handful of countries owe relatively little to the International Monetary Fund, giving them more flexibility to fund development projects without heavy repayment burdens.