Nigeria’s fiscal deficit narrowed significantly to N330 billion in the third quarter of 2025, reflecting improved government revenue performance, tighter expenditure management, and easing fiscal pressure compared to the corresponding period of 2024.

This was disclosed in the latest fiscal performance report released by the Budget Office of the Federation, which showed that the Federal Government recorded a much lower deficit than initially projected for the quarter under review.

The report indicated that the government’s revenue and expenditure position resulted in a fiscal deficit of N330 billion in Q3 2025, representing a reduction of N3.20 trillion or 90.68% below the projected quarterly deficit of N3.53 trillion.

The latest fiscal data showed a notable improvement in Nigeria’s public finance position during the third quarter of 2025.

The deficit-to-GDP ratio was estimated at 2.29%, remaining within the 3% threshold prescribed under Nigeria’s Fiscal Responsibility Act and ECOWAS convergence criteria.

“The Q3 2025 fiscal deficit was also by far lower than the N3.17 trillion deficit recorded in the third quarter of 2024,” the report stated.

To finance the deficit, the Federal Government utilised domestic borrowing of N970 billion, privatisation proceeds of N120.61 billion, and multilateral and bilateral project-tied loans valued at N3.13 trillion.

The Budget Office noted that the lower deficit reflects stronger fiscal management and improved revenue mobilisation efforts during the period.

The Federal Government has intensified efforts to improve tax administration and increase remittances from government-owned enterprises.

Reforms targeted at reducing leakages in public finance management have also contributed to improved fiscal outcomes.

However, concerns remain over rising debt service obligations, inflationary pressures, and dependence on borrowing to support government financing needs.

Nigeria has faced persistent fiscal deficits for several years, driven largely by weak oil revenues, subsidy-related spending, rising recurrent expenditure, and exchange rate pressures.

In recent years, elevated debt servicing costs and revenue shortfalls have placed significant pressure on public finances.

The government has increasingly relied on domestic and external borrowing to bridge fiscal gaps and fund critical infrastructure projects.

Recent fiscal reforms, including fuel subsidy removal and tax administration reforms, are aimed at strengthening revenue generation and improving fiscal sustainability.

Earlier, Nairametrics reported that Nigeria’s fiscal deficit jumped to N13.51 trillion in 2024, exceeding targets and breaching the FRA 2007 deficit-to-GDP limit.

The Federal Government recorded N11.89 trillion in fresh borrowings in the first nine months of 2025, but spent only N3.10 trillion on capital expenditure.

The loans comprised N7.08 trillion in domestic borrowing and N4.81 trillion in multilateral and bilateral project-tied loans.

The Federal Government increased its planned borrowing for 2026 to N29.20 trillion following an expansion in the proposed budget size and fiscal deficit.