Nigeria’s fiscal challenges deepened in January 2025 as the Federal Government’s retained revenue plunged by 69.19 percent compared to December 2024, according to the Central Bank of Nigeria (CBN)’s January 2025 Monthly Economic Report.
This sharp decline in earnings pushed debt servicing obligations far above total revenue, raising fresh concerns over the country’s growing debt burden and limited fiscal space.
The CBN report revealed that the Federal Government generated N483.47 billion in retained revenue during the month, a steep fall from the N1.57 trillion recorded in December 2024.
In contrast, debt servicing costs remained high at N696.27 billion, meaning that debt payments consumed approximately 144 percent of all government earnings for the month.
Despite marginal improvements in some revenue streams, the overall income was insufficient to meet debt obligations without borrowing.
The January retained revenue recorded only a slight 0.89 percent increase compared to the N479.21 billion generated in January 2024, reflecting stagnation rather than meaningful growth.
The report pointed to a decline in Federal Government Independent Revenue and lower receipts from exchange gains as key factors behind the poor revenue performance.
Independent Revenue, which measures income generated by Ministries, Departments, and Agencies, dropped significantly to N32.28 billion, a 66.14 percent year-on-year decline from N95.34 billion recorded in January 2024.
Federation Account allocations contributed N167.69 billion while the VAT Pool Account added N90.73 billion. Exchange gains provided some support, growing by 35.6 percent year-on-year to N188.09 billion.
However, contributions from excess crude oil sales and other sources were nonexistent during the period.
While December 2024’s debt servicing accounted for 44.37 percent of government revenue, by January 2025, this figure had surged to 144 percent, highlighting the extent of fiscal deterioration within a single month.
Although debt servicing obligations declined slightly by 7.88 percent compared to January 2024, the sharp drop in revenue meant that Nigeria’s debt-to-revenue ratio worsened significantly. This underlines the Federal Government’s increasing reliance on debt to fund basic operations amid sluggish revenue growth.
The International Monetary Fund (IMF) has already flagged Nigeria’s fiscal vulnerabilities. Speaking in Washington D.C. last week, IMF Managing Director Kristalina Georgieva warned that falling global oil prices are intensifying budgetary pressures for oil-dependent economies like Nigeria.
She urged African governments to accelerate domestic revenue mobilization by expanding tax bases, reducing evasion, and building stronger fiscal buffers.
With Nigeria’s retained revenue falling far below monthly targets and debt obligations rising, fiscal risks remain elevated. Analysts note that without a significant boost in non-oil revenue generation and stronger fiscal discipline, Nigeria’s fiscal deficit could widen further in 2025, deepening concerns over debt sustainability.