More Worries As FG’s Debt Servicing Gulps N696 Billion In One Month

• Nigeria has spent almost 150% of its monthly revenue on debt servicing, according to data from the CBN report
• This is troubling news for the nation, as it could imply resorting to more borrowing to service debts
• The overall picture shows a sharp decline in retained revenue, even though debt servicing has stayed in the same range

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

Nigeria is entering into a precarious fiscal situation, and current data shows that Nigeria is spending more than its retained revenue on debt servicing.

The Monthly Economic Report released by the Central Bank of Nigeria (CBN) showed that in the month of January 2025, Nigeria had a retained revenue of N483.47 billion.

In the same month, debt servicing gulped a whopping N696.27 billion, about 44% more than the government revenue for the period.

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This means that Nigeria’s debts have currently reached a position where revenue cannot cover the debts, and the government will keep resorting to more borrowings to meet its obligations.

Despite revenue improvement, debts remain higher

The CBN Economic report showed that there were slight improvements in some of the government’s revenue categories, with retained revenue increasing slightly from N479.21 billion in January 2024 to N483.47 billion in January 2025.

Exchange gains grew year-on-year by 35.6% from N138.67bn in January 2024 to N188.09bn in January 2025.

Independent revenue, on the other hand, declined by 66.14%, from N95.34 billion in January 2024 to N32.28 billion in January 2025.

While the VAT pool account contributed about N90.73 billion, the federation account contributed N167.69 billion.

Categories like excess crude oil sales and others added nothing to the retained revenue despite the robust projections, probably due to the volatile nature of global oil prices.

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The report read:

“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.”

Fears over Nigeria’s revenue generation model

A month-on-month review shows a more troubling picture with retained revenue reducing sharply, even when debt servicing stayed around the same range, the Punch reports.

Debt servicing in December 2024 was N755.86 billion, while retained revenue was N1.57 trillion, later dropping by 69.19% to N483.47 billion.

This implies a 69.19% drop in retained revenue in January 2025, even though debt servicing only declined by about 7.88% from the previous month.

The debt-to-revenue ratio thus went from 44.37% in December 2024 to 144% in January 2025, raising serious concerns about Nigeria’s financial health.

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Nigeria’s revenues under threat as oil prices crash

In related news, the Nigerian economy is facing pressures from multiple directions.

With oil prices crashing below key levels, government revenue is depleting, and the foreign exchange reserves are bearing the brunt/

The tariff war started by the US government is also compounding the woes, sending shock waves to vulnerable nations, including Nigeria.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.

Source: Legit.ng