Seven Nigerian states spent an average of 190 per cent of their Internally Generated Revenue (IGR) on debt servicing in the first quarter of 2025, underscoring the deepening fiscal crisis facing subnational governments.
Budget Implementation Reports for Q1 2025 from Bayelsa, Adamawa, Benue, Niger, Kogi, Taraba, and Bauchi reveal that each of the states spent significantly more on debt repayment than they generated internally—some exceeding their IGR by more than 300 per cent.
The data highlights a troubling trend when compared to the fourth quarter of 2024, with debt servicing costs rising steeply by 51 per cent. Collectively, the seven states spent N98.71 billion on debt servicing in Q1 2025, up from N65.24 billion in the previous quarter—a difference of N33.48 billion.
While the states recorded a modest improvement in IGR—from N44.05 billion in Q4 2024 to N51.92 billion in Q1 2025, an increase of N7.87 billion—it was nowhere near enough to offset the sharp rise in debt service obligations. The imbalance reflects a growing fiscal gap that is threatening the financial sustainability of these states.
Meanwhile, allocations from the Federation Account Allocation Committee (FAAC) to the affected states increased from N360.75 billion in Q4 2024 to N419.86 billion in Q1 2025—an additional N59.11 billion. The uptick highlights the continued reliance of many states on federal disbursements to fund not just governance and development, but also to service ballooning debt.
Analysts warn that the pattern of overspending on debt repayment relative to revenue generation is unsustainable and could crowd out critical investments in infrastructure, education, and health unless urgent reforms are implemented.
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