The Federal Government’s 2025 budget has earmarked a staggering N24.8 trillion for debt servicing and public sector salaries, raising concerns about fiscal sustainability and the economy’s growth trajectory. This allocation represents a significant portion of the proposed N54 trillion budget and highlights the persistent challenge of balancing development needs with mounting financial obligations.
A Closer Look at the Numbers
- Debt Servicing:
- The allocation for debt servicing is projected at N17.5 trillion, driven by rising domestic and external borrowing.
- Nigeria’s total public debt stock surpassed N100 trillion in 2024, reflecting years of heavy borrowing to finance budget deficits and infrastructure projects.
- Salaries and Pensions:
- N7.3 trillion is set aside for recurrent expenditure, covering salaries and pensions for public sector workers.
- The growing wage bill underscores the need for public sector reform to address inefficiencies.

Implications of the Budget Priorities
The dominance of debt servicing and salaries in the budget leaves limited room for capital expenditure and critical investments in key sectors like education, health, and infrastructure. Experts have flagged several concerns:
- Crowding Out Development: A disproportionate focus on debt servicing hampers the government’s ability to invest in projects that drive economic growth.
- Rising Debt Vulnerability: Continued borrowing to finance deficits increases the risk of debt distress, particularly in the face of fluctuating oil revenues and currency depreciation.
- Limited Fiscal Flexibility: High recurrent spending restricts the government’s capacity to respond to emergencies and implement reforms.
Calls for Reforms
Stakeholders and analysts have urged the Federal Government to prioritize fiscal reforms to reduce the reliance on borrowing and enhance revenue generation:
- Diversifying Revenue Sources: Expanding non-oil revenue through improved tax collection, digital economy growth, and public-private partnerships.
- Public Sector Efficiency: Streamlining the civil service to reduce redundancies and lower the wage bill.
- Debt Management: Restructuring existing loans and exploring concessional financing options to reduce interest payment burdens.
- Capital Expenditure Focus: Allocating more funds to sectors that yield long-term economic benefits, such as infrastructure, agriculture, and technology.
Public Reaction
The budget allocation has sparked debates among Nigerians, with many expressing concerns about the potential for increased hardship due to reduced spending on social services. Others worry about the lack of a clear strategy to address the country’s debt burden sustainably.
Conclusion
As the Federal Government plans its 2025 budget, the heavy allocation for debt servicing and salaries underscores the urgent need for fiscal discipline and structural reforms. Balancing immediate obligations with long-term growth remains a critical challenge, requiring bold and innovative policy measures to steer the country toward economic stability and prosperity.
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