By: Goodluck E.Adubazi, Abuja.

Nigeria’s rising debt burden is increasingly squeezing government finances, with debt servicing consuming about 34 per cent of government revenue in 2025 and projected to rise to between 45 and 53 per cent in the coming years, a new report by the BudgIT Foundation has revealed.

The report warned that the growing debt obligations could significantly reduce the fiscal space available for critical sectors such as infrastructure, agriculture, and climate programmes.

The findings were contained in BudgiT’s report titled “Nigeria Federal Budget Trend Analysis (2023–2025): Climate, Economic Growth and Development Priorities amid Fiscal Governance Challenges,” presented on Friday in Abuja.

Speaking during the presentation, the Deputy Country Director of BudgiT, Vahyala Kwaga, expressed concern over Nigeria’s fiscal management system, warning that overlapping federal budgets, weak fiscal planning, and limited transparency are undermining economic development and climate action.

Kwaga noted that Nigeria’s current practice of extending and overlapping budgets contradicts the country’s legal fiscal framework and weakens accountability in public spending.

He cited the recent extension of the capital component of the 2025 budget to November, a move that effectively stretches the budget’s life cycle to nearly 24 months, contrary to Nigeria’s legally established 12-month fiscal calendar.
“Civil society is asking a very simple question — can Nigeria finally end this cycle of overlapping budgets? The 2025 capital component was meant to end in March but has now been extended to November,” he said.

BudgiT added that the Director-General of the Budget Office had previously argued that the government has legal backing to operate multiple budgets simultaneously, Kwaga said no specific provisions of relevant laws were cited to support the claim.

He added that such practices create confusion in fiscal management and make it difficult to track government spending and project implementation.

The BudgiT report also criticised the federal government’s revenue forecasting process, describing many projections as unrealistic.

Kwaga warned that when projected revenues fail to materialise, projects and key social services linked to those revenues are often affected.
“When you project revenue that you eventually fail to generate, it means the projects tied to that revenue will not be implemented. That translates into poor healthcare, poor education, and weak water and sanitation services,” he said.

The report therefore called for more realistic fiscal projections to improve Nigeria’s credibility with investors and the international community.

BudgiT also raised concerns about the process surrounding the Medium-Term Expenditure Framework (MTEF), a key fiscal planning document meant to guide national budgets.

According to Kwaga, the framework was submitted to the National Assembly only two days before the appropriation bill for the fiscal year was presented, contrary to provisions of the Fiscal Responsibility Act which require the document to be approved before the budget is introduced.
“This is again a violation of existing law. Nigerians are not asking for too much when they insist that the government obeys its own laws,” he said.

The organisation further expressed concern over the growing use of supplementary budgets, noting that they often emerge because of weak fiscal planning and the absence of a coherent public cash management plan.

Kwaga warned that such additional budgets expand government spending without corresponding revenue increases, thereby widening Nigeria’s fiscal deficit and increasing reliance on borrowing.
On climate financing, the report noted that climate-related spending currently accounts for only three to five per cent of Nigeria’s federal budget — far below the level required to effectively address climate challenges.

According to the report, in 2025 the Federal Ministry of Power received about ₦252.58 billion for climate mitigation, while the Federal Ministry of Environment received ₦47.67 billion for climate adaptation, indicating that government climate spending is heavily skewed toward mitigation rather than resilience.

BudgiT also revealed that Nigeria has struggled to attract external climate finance and has not fully utilised financial instruments such as green bonds at the sub-national level.

The report further highlighted major gaps between budget allocations and actual implementation across several sectors.

Despite significant allocations to sectors such as agriculture and infrastructure, execution rates remain low, with some programmes recording utilisation rates as low as two to 15 per cent.

BudgiT said such inefficiencies weaken the impact of government spending and slow national development.
The organisation also criticised the federal government for irregular publication of budget implementation reports.

Kwaga noted that reports which were previously released quarterly are now published only once every eight or twelve months, limiting public access to information on how public funds are spent.
“Nigerians need to know how well the government is implementing the budget month-by-month and quarter-by-quarter,” he said.

He also warned that the expansion of service-wide votes and other vaguely defined budget lines makes it difficult to track public spending or identify responsible implementing agencies.

BudgiT therefore called for a comprehensive fiscal reset beginning with the 2026 budget cycle.

Its recommendations include ending the practice of extending budgets beyond the fiscal year, enforcing strict timelines for budget preparation and submission, strengthening oversight by the National Assembly through evidence-based analysis, publishing timely budget implementation reports, and amending the Fiscal Responsibility Act to include penalties for violations.

BudgiT also called for the introduction of climate-responsive budgeting and improved transparency in procurement and capital project tracking.

Present at the briefing, including Enebi Opaluwa and Uchenna Arisukwu, also emphasised the need for stronger fiscal transparency and better integration of climate priorities into Nigeria’s budgeting process.

They warned that without structural reforms in public financial management, Nigeria risks continued inefficiency in public spending and missed opportunities for economic growth and climate resilience.

BudgiT added that the 2026 federal budget cycle presents a critical opportunity for Nigeria to restore fiscal discipline and ensure that government spending translates into tangible development outcomes for citizens.