Over the past two decades, Nigeria’s federal budgets have told a story of soaring expenditures, stagnant revenues, and an ever-growing reliance on borrowing. From Olusegun Obasanjo’s administration in 2007 to Bola Tinubu’s in 2025, the numbers reveal a troubling trend: while spending has surged, revenue growth has lagged, forcing successive governments to take on increasing debt.
The Obasanjo years (2007): Fiscal prudence under pressure
In 2007, President Olusegun Obasanjo presented an $18.3 billion budget (Statisense, Proshare) with plans to borrow $5 billion (Proshare)—about 27 percent of the total budget. Revenue stood at $13.3 billion (pro share), meaning the government needed to cover a modest deficit.
At the time, Nigeria was still benefiting from debt relief secured in 2005, which wiped out nearly $30 billion in external obligations. Oil prices were high, and the economy was growing at over 6 percent annually. Yet, even then, borrowing was necessary to fund infrastructure and social programmes.
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The Jonathan era (2015): Expansion amidst economic headwinds
By 2015, under President Goodluck Jonathan, the budget had grown to $22 billion, forcing the government to borrow $9 billion—a staggering 41 percent of the budget.
This period marked the beginning of Nigeria’s fiscal challenges. Oil prices crashed in 2014, exposing the country’s over-reliance on crude exports. Despite this, expenditure continued to rise, particularly on recurrent costs like salaries and subsidies. The deficit ballooned, and debt servicing began consuming a larger share of revenues.
The Buhari administration (2023): Debt-Fuelled spending reaches new heights
Under President Muhammadu Buhari, Nigeria’s budget expanded dramatically to $47.39 billion in 2023 (Africanews), more than double Jonathan’s 2015 budget. But revenues, though improved at $22 billion, still fell far short, necessitating a $25 billion borrowing plan—53 percent of the total budget.
This was the peak of Nigeria’s fiscal crisis. Buhari’s government borrowed heavily to fund infrastructure, social interventions, and security amid rising insurgency. The Central Bank also resorted to massive Ways and Means financing (direct money printing), which pushed inflation to 18-year highs. By the end of his tenure, Nigeria’s debt stock had surpassed $100 billion, with debt servicing consuming 33.82 percent (debt management office) of revenues at times.
“By the end of his tenure, Nigeria’s debt stock had surpassed $100 billion, with debt servicing consuming 33.82 percent (debt management office) of revenues at times.”
Tinubu’s 2025 Budget: A Shift Towards Fiscal Restraint?
President Bola Tinubu’s 2025 budget proposal stands at $36.8 billion (the Budgit Foundation), a significant drop from Buhari’s 2023 figures. Borrowing is projected at $8.98 billion (24% of the budget), while revenues are expected to hit $24.38 billion. (NISER)
On the surface, this suggests a move towards fiscal consolidation. Tinubu’s reforms—including fuel subsidy removal and exchange rate liberalisation—have boosted government earnings. However, challenges remain:
1. Revenue realism – The $24.38 billion revenue target is ambitious. While subsidy removal has freed up funds, oil production remains below targets, and tax collection is inefficient.
2. Debt sustainability – Though borrowing is lower, Nigeria’s total debt remains alarmingly high. Interest payments could still strain the budget if revenues underperform.
3. NASS amendments – The National Assembly has a history of inflating budgets. If lawmakers add new projects without corresponding revenue, the deficit could widen again.
The broader fiscal crisis
Nigeria’s budget trends reveal deeper structural problems:
· Oil dependence – Despite efforts to diversify, oil still accounts for over 60 percent of government revenue. Volatile prices make long-term planning difficult.
· Weak tax base – At just 6-8 percent of GDP, Nigeria’s tax-to-revenue ratio is among the lowest globally. Loopholes and evasion persist.
· Recurrent costs dominate – Salaries, pensions, and debt servicing consume most revenues, leaving little for capital projects.
Read also: Nigeria’s agricultural budget in 2025: A regional analysis
The way forward
To avoid a full-blown debt crisis, Nigeria must:
1. Boost non-oil revenue – Expanding VAT, property taxes, and digital levies can reduce reliance on crude earnings.
2. Cut waste – Merging redundant agencies and reducing governance costs could save billions.
3. Prioritise productive spending – Investments in power, transport, and agriculture can spur growth, easing future revenue pressures.
Conclusion
Nigeria’s budgets since 2007 show a dangerous pattern: spending rises, but revenues do not keep pace. While Tinubu’s 2025 plan suggests fiscal tightening, the real test will be implementation. Without serious reforms, the country risks sinking deeper into a debt trap—one that could stifle growth for years to come.
Dr Oluyemi Adeosun is BusinessDay’s Chief Economist.
