BREAKING: Nigeria faces a fiscal deficit of ₦7 trillion as of Q3 2024.
Nigeria’s fiscal deficit hit ₦7.05 trillion by the end of Q3 2024, as revealed by President Bola Ahmed Tinubu during his presentation of the 2025 Budget of Restoration to the National Assembly on December 18, 2024.
READ MORE : Mixed Reactions Trail Tinubu’s N49.7 Trillion 2025 Budget Proposal
The deficit reflects the gap between the nation’s total revenue and expenditure for the year, underscoring the government’s reliance on borrowing to fund ambitious spending plans.
In his address, the President also highlighted a ₦47.9 trillion budget for 2024, supported by projected revenue of ₦34.8 trillion, resulting in a record-breaking fiscal deficit of ₦13.1 trillion.
Nigeria’s Fiscal Performance and 2025 Budget: Key Highlights
The recently disclosed budget figures, based on the Medium Term Expenditure Framework (MTEF) presented in November by the Finance Minister, offer insights into the country’s fiscal performance and challenges.
Budget Performance Breakdown
President Bola Ahmed Tinubu revealed that as of Q3 2024:
- Revenue: ₦14.55 trillion was generated, representing 75% of the annual target.
- Expenditure: ₦21.60 trillion was spent, accounting for 85% of the budgeted amount.
This discrepancy leaves a fiscal deficit of approximately ₦7 trillion, underscoring Nigeria’s ongoing struggle to balance its budget amid economic pressures.
For 2024, the federal government planned a ₦35 trillion budget supported by projected revenue of ₦25.8 trillion, resulting in an anticipated deficit of ₦9.2 trillion.
Economic Context
President Tinubu highlighted progress in addressing Nigeria’s economic challenges, noting efforts to stimulate recovery and growth despite global and domestic pressures.
The revenue shortfall underscores the need for:
- Enhanced fiscal discipline.
- Improved tax revenue collection.
- Alternative financing to curb debt dependence.
Government’s Response
The administration emphasized its focus on stimulating the economy through investments in infrastructure, security, and human capital development.
“While challenges persist, we improved revenue collection and fulfilled key obligations. The transformational effects of this on our economy are gradually being felt,” said President Tinubu.
Macroeconomic Indicators
Despite the fiscal deficit, Nigeria’s macroeconomic indicators showed signs of improvement in 2024:
- GDP Growth: The economy grew by 3.46% in Q3 2024, up from 2.54% in Q3 2023.
- Foreign Reserves: $42 billion, providing a buffer against external shocks.
- Trade Surplus: ₦5.8 trillion, driven by rising exports (NBS data).
2025 Budget Outlook
The 2025 budget is set at ₦47.90 trillion, approximately $31 billion at an assumed exchange rate of ₦1,500/$1. Comparatively, the 2024 budget was ₦35 trillion or $23 billion under the same rate.
Key goals for 2025 include:
- Achieving macroeconomic stability.
- Reducing inflation.
- Promoting inclusive growth.
Challenges Ahead
The fiscal deficit, projected to rise to ₦13.08 trillion in 2025 from ₦9.18 trillion in 2024, represents:
- 38% of federal government revenue.
- 3.87% of estimated GDP, exceeding the 3% threshold set by the Fiscal Responsibility Act (FRA) of 2007.
Factors driving the widening deficit include:
- Implementation of a new minimum wage.
- Pension obligations and consequential adjustments.
- Increased debt servicing costs.
Path Forward
The government aims to reduce deficit levels to the FRA’s threshold within the medium term. Financing for the deficit will largely rely on domestic borrowings, given limited external borrowing options.
The administration’s commitment to fiscal sustainability will play a critical role in navigating these challenges while fostering economic growth.
