KEY POINTS
- Nigeria’s oil and gas revenue fell 62% short of its target in the first seven months of 2025, contributing to a total federal revenue shortfall estimated at N30 trillion for the year.
- The crisis has forced increased borrowing and means over 70% of government revenue is now spent on debt servicing, triggering political disputes over budget planning for 2026 and criticism of inconsistent government messaging.
- The fiscal emergency has delayed parliamentary approval of next year’s budget framework and cast doubt on President Tinubu’s promise to end the practice of running multiple, overlapping annual budgets.
A profound crisis is unfolding within Nigeria’s public finances, with newly released data revealing the federal government’s oil and gas revenue fell a staggering 62% short of target in the first seven months of the year.
This collapse has triggered a wider fiscal emergency, casting severe doubt on the credibility of the national budget and forcing the finance minister to admit to a catastrophic N30 trillion shortfall in total projected revenue for 2025.
The figures, contained in the government’s own 2026–2028 Medium Term Expenditure Framework (MTEF), paint a bleak picture. Against a prorated target of N29.78 trillion for January to July, gross oil and gas collections reached only N11.17 trillion, a deficit of N18.61 trillion. After statutory deductions, the net revenue delivered to the crucial Federation Account was just N9.61 trillion against a target of N25.39 trillion.
Finance Minister and Coordinating Minister for the Economy, Wale Edun, presented the grim reality to lawmakers this week. He revealed that total federal revenue for 2025 is now projected to close at about N10.7 trillion, a devastating shortfall from the N40.8 trillion initially estimated to fund the N54.9 trillion “Budget of Restoration”.
“The current trajectory indicates that federal revenues for the full year will likely end at around ₦10.7 trillion, compared with the ₦40.8 trillion that was projected,” Edun told the House of Representatives Committees on Finance and National Planning.
The disaster stems from a dual failure in the nation’s primary revenue source. The 2025 budget was ambitiously benchmarked on crude oil selling at $75 per barrel and production of 2.1 million barrels per day (mbpd).
In reality, global prices have languished, recently falling below $60, while Nigeria’s average daily production, including condensates, has struggled around 1.66 mbpd. This persistent gap between optimistic assumptions and harsh operational realities has become a recurring theme, undermining fiscal planning.
Political and Economic Fallout Exposes Deepening Cracks in Fiscal Governance
The revenue collapse has immediate and severe consequences. To bridge the funding gap, the government has already borrowed N14.1 trillion this year. Furthermore, an analysis of the MTEF shows that in the first seven months of 2025, a staggering 72% of all federal revenue, N9.81 trillion out of N13.67 trillion was consumed by debt servicing.
When combined with personnel costs, spending on debt and wages alone exceeded total income, leaving virtually no fiscal space for critical capital projects.
The crisis has ignited fierce political debate and exposed contradictions within government. Minister Edun’s stark admission stands in sharp contrast to President Bola Tinubu’s declaration in September that the government had already met its annual revenue target. This inconsistency has drawn criticism and sowed confusion. Economist Marcel Okeke pointedly asked, “This raises a question: which source should Nigerians believe?”.
The turmoil is now directly impacting the planning for next year. In an almost unprecedented move, the House of Representatives stepped down consideration of the very MTEF document that outlines the 2026 budget framework.
The decision followed an intense debate where lawmakers clashed over whether to adopt a more conservative oil price benchmark of $60 per barrel, as recommended by a parliamentary committee, rather than the government’s proposed $64.85. Speaker Tajudeen Abbas warned that lowering the benchmark without a clear plan to cover the resulting revenue shortfall would render the entire budget exercise incomplete.
Economists are sounding the alarm about the ripple effects. Paul Alaje warned that the massive revenue gap threatens to reverse recent improvements in Nigeria’s debt-service-to-revenue ratio. The options are bleak: further borrowing abroad could pressure the Naira, while domestic borrowing risks crowding out private investment. The government’s response includes a push for new tax reforms, but these measures face significant public and political pushback over fears they will exacerbate hardship without addressing fundamental waste and corruption.
Amidst the turmoil, President Tinubu presented the 2026 Appropriation Bill to the National Assembly, vowing a “reset” and an end to the “habit of running three budgets in one inflow.”. He pledged that from April 2026, Nigeria would operate on a single budget, promising stronger fiscal discipline.
However, with the House yet to approve the foundational MTEF and the nation still grappling with the implementation of multiple, overlapping annual budgets, the path to achieving this promised fiscal consolidation remains fraught with the very challenges that have defined the disastrous 2025 fiscal year.
