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2025: Bauchi Earmarks N29.8Bn for Debt Service, Higher than Capital Expenditure for Education

The Bauchi State Government has earmarked the sum N29.8Bn for debt servicing in the recently assented 2025 appropriation bill also known as 2025 budget in the state.

The debt service, which is equivalent to 5.93% of the entire budget, would gulp 59.72% of the state’s internally generated revenue (IGR) of N49.9 billion projection for the year.

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WikkiTimes review of the Budget shows that what the state will spend as public debt charges in 2025 is more than its capital expenditure for the ministry of education which has the allocation of N26.3 billion.

Between 2020 and 2025, according to the state’s budget, allocations for debt servicing have risen up, outpacing the growth in Internally Generated Revenue (IGR). 

The review indicates that over the years including its N502 billion total budget for 2025, the state rising debt profile is raising concerns about the state’s borrowing practices, repayment plans, and the implications on service delivery and long-term development.

This allocation reflects the state’s increasing reliance on borrowed funds, with debt servicing becoming a substantial recurring expenditure. 

While borrowing can be a strategic tool for financing developmental projects, its impact on fiscal sustainability and service delivery warrants scrutiny. 

WikkiTimes notes that for five years, debt servicing as a percentage of IGR increased significantly, peaking at 80% in 2023 before declining slightly in 2025 due to a notable rise in IGR projections.

WikkiTimes reports that even more concerning is that critical sectors such as education and health receive only a minimal percentage of the actual budget performance, especially when compared to the higher implementation for running costs in previous budgets.

Implications of Debt Profile

There have been concerns over the debt profile of the country and the subnationals in the country, with experts warning that this could harm their development in the process especially when the resources are not utilised efficiently.

The growing allocation for debt servicing has limited the fiscal space for critical public services such as healthcare, education, and infrastructure. 

For example, the 2023 debt servicing of Bauchi State accounted for 80% of the IGR, leaving minimal resources for direct investments in sectors that directly benefit citizens. In the 2024 budget, over 74% was to service debt.

The reliance on external revenue sources, such as federal allocations, to bridge funding gaps reveals a vulnerability in the state’s financial structure. 

While federal allocations remain significant, they are subject to macroeconomic volatility, such as oil price fluctuations and subsidy reforms.

The high cost of debt repayment diverts funds away from capital projects that could stimulate economic growth, according to a report. As a result, critical infrastructure projects, job creation initiatives, and social welfare programs are either delayed or inadequately funded.

The steady increase in debt servicing suggests a growing debt burden which could lead to unsustainable borrowing practices, further compounding fiscal pressures and reducing the state’s ability to invest in long-term development.

In 2020, Bauchi allocated N3.8 billion for debt servicing, representing 29.23% of its N13 billion IGR. By 2021, this figure more than tripled to N13 billion, consuming 72.63% of the N17.9 billion IGR. 

The upward trajectory continued in 2022, with N17.1 billion allocated, accounting for 67.32% of the N25.4 billion IGR. 

This period marked a rapid escalation in the state’s debt obligations relative to its revenue generation capacity.

In 2023, debt servicing reached N24.4 billion, consuming 80% of the N30.5 billion IGR. while in 2024, debt servicing hiked to N27.5 billion representing over 74% of its N37 billion (proposed) IGR. However, by 2025, the percentage declined to 59.72%, attributed to an increase in projected IGR to N49.9 billion. 

This improvement reflects an effort to boost revenue but raises concerns about the achievability of these ambitious IGR targets.

Analysts maintained that states like Bauchi must intensify efforts to expand their IGR base through improved tax administration, enforcement of compliance measures, and diversification of revenue streams beyond traditional sources.

They must also prioritize infrastructure and development projects that can generate revenue and stimulate economic growth so that borrowing should be restricted to projects with clear economic and social returns. 

Without a proactive approach to revenue generation and debt control, the indebted state risks undermining its capacity to fund essential services and achieve sustainable development.

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