By Onu Okorie

Nigeria’s federal government ran up deficit-financing items totalling N12.07 trillion in the first three quarters of 2025, surpassing its own budget benchmark by N1.49 trillion or 14.12%, the Budget Office of the Federation has disclosed, painting a troubling picture of a government borrowing more than planned but delivering far less than promised on capital projects.

The figures, drawn from the 2025 Third-Quarter Budget Implementation Report, lay bare the widening chasm between the government’s financing activities and its actual development expenditure, with fresh loans nearly four times the value of capital projects executed in the same period.

At the heart of the report is the structure and scale of how the government is funding its fiscal gap, and the numbers warrant close scrutiny.

Total deficit-financing items of N12.07 trillion comprised primarily two streams: domestic borrowing and multilateral/bilateral project-tied loans. Together, they not only exceeded the N10.58 trillion budgeted for the nine-month period but did so across virtually every component.

Domestic borrowing, the single largest financing item, stood at N7.08 trillion — above the N6.44 trillion budget by N639.89 billion, or 9.94%. While the overrun here is relatively contained compared with other lines, the absolute figure underscores the government’s continued and growing reliance on the domestic debt market, with implications for interest rates and private-sector credit access.

Far more dramatic was the performance of multilateral and bilateral project-tied loans. This category reached N4.81 trillion against a three-quarter target of N2.52 trillion, an excess of N2.28 trillion, or 90.54%. In other words, the government drew down nearly twice the amount it had planned from multilateral and bilateral lenders in just nine months. The significance of this figure deepens considerably when set against capital spending data (examined below), which shows that despite this surge in project-tied loan disbursements, the corresponding capital expenditure line recorded zero spending.

Total fresh borrowings for the nine-month period stood at N11.89 trillion, exceeding the N10.34 trillion projected for the first three quarters by N1.54 trillion, or 14.91%.

Foreign Borrowing: A Notable Absence

One deficit-financing line that starkly underperformed was foreign borrowing. No foreign loans were recorded during the entire nine-month period, despite a budget provision of N1.38 trillion set aside for that item across the first three quarters. The absence of any drawdown on this line suggests difficulties in accessing international capital markets or delays in loan agreement processes — and may have contributed to the compensatory surge in multilateral and bilateral drawdowns.

Within the third quarter specifically, the Budget Office reported that the deficit was financed through a combination of privatisation proceeds and domestic borrowing. The available financing items for Q3 alone included domestic borrowing of N970.00 billion, privatisation proceeds of N120.61 billion, and multilateral and bilateral project-tied loans of N3.13 trillion.

The N3.13 trillion in multilateral and bilateral loan drawdowns in a single quarter is particularly striking. It accounts for the lion’s share of the full nine-month total of N4.81 trillion under that category, suggesting a sharp back-loaded acceleration in loan disbursements in the third quarter — yet one that has not manifested in capital project execution on the ground.

If the deficit financing data tells one story, the capital expenditure figures tell an even more alarming one — and the two together expose a fundamental dysfunction in how borrowed resources are being translated into development outcomes.

Total capital expenditure in the first nine months stood at N3.10 trillion, against a budget of N17.58 trillion. The government spent only N17.66 out of every N100 allocated to capital projects, a capital budget performance rate of 17.66%, leaving an unspent provision of N14.48 trillion, or 82.34%.

Capital spending by Ministries, Departments and Agencies was particularly dire: N1.21 trillion against a N13.90 trillion target, a shortfall of N12.69 trillion or 91.31%. Government-owned enterprises were the only category to meet their capital budget, spending exactly their N615.68 billion provision. Grants and donor-funded projects outperformed, reaching N1.08 trillion against a N541.43 billion projection.

Most revealing, however, is the capital expenditure line for multilateral and bilateral project-tied loans — which recorded zero naira in spending, despite N2.52 trillion budgeted under that capital category. This is in direct contrast to the N4.81 trillion in multilateral and bilateral loans recorded on the financing side. The government drew down billions from project-tied lenders but executed no corresponding capital spending under that line. Where those funds went remains unexplained in the report.

Taken together, the data reveal a fiscal model in which borrowing is running far ahead of delivery. The N11.89 trillion in fresh loans accumulated over nine months was approximately 3.83 times the N3.10 trillion spent on capital projects. Expressed differently, capital spending amounted to only 26.13 kobo for every naira borrowed in the period.

The Budget Office acknowledged that capital releases had been constrained by its bottom-up cash release process, resource availability and shifting government priorities. It said N780.28 billion was released to MDAs and others for capital projects in the third quarter alone — a figure that, while significant in isolation, represents a fraction of what the budget demands.

For fiscal analysts and development economists, the Q3 report raises questions that go beyond headline numbers. Nigeria is borrowing more than budgeted, across multiple financing channels, with multilateral loan drawdowns nearly doubling their target. Yet the capital infrastructure that those loans are nominally tied to is not materialising at anything close to the projected pace.

The pattern, aggressive deficit financing, negligible capital execution, and a complete absence of spending against project-tied loan disbursements — suggests systemic weaknesses in project implementation, cash management, and financial accountability that risk compounding the country’s debt burden without delivering commensurate growth in productive assets.