The Federal Government has projected total revenue of ₦50.74tn for 2026 and set an economic growth target of 4.68%, even as its proposed deficit for the year has surged to a level that exceeds the entire 2022 national budget by ₦2.78tn.
The sharp rise in the deficit suggests the government may borrow about 16.1% more than what the country spent in 2022. Analysts warn that the widening fiscal gap—together with a heavy debt-service burden—signals a more challenging year ahead.
Economists caution that Nigeria risks deeper fiscal strain unless spending is tightened, efficiency improves, and the government restores a credible budget calendar. They note that escalating deficits, unpredictable budget cycles and growing debt obligations could undermine recent economic stability and put additional pressure on households and businesses in 2026.
These projections follow the Federal Executive Council’s approval of the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP). Minister of Budget and Economic Planning Atiku Bagudu said the document will be submitted to the National Assembly on Monday.
Bagudu said the draft is built on an oil price benchmark of $64.85 per barrel and an exchange rate assumption of ₦1,512/$ for 2026. The parameters were set after consultations with ministries, private-sector players, civil society organisations, and development partners.
For the first time, the government adopted dual crude-production figures: an industry target of 2.06 million barrels per day and a conservative benchmark of 1.8mbpd, providing a 12.6% buffer against possible disruptions. Bagudu emphasised that the cautious price benchmark was intentional.
He warned that election-related spending ahead of 2027 could heighten pressure on the exchange rate. He also projected that the economy would grow by 4.68% in 2026.
Expected Federation revenue for 2026 is ₦50.74tn, with ₦22.60tn allocated to the Federal Government, ₦16.30tn to states, and ₦11.85tn to local governments. Federal revenue from all sources— including ₦4.98tn from government-owned enterprises—totals ₦34.33tn, about 16% lower than the 2025 estimate.
Key spending items include ₦3tn for statutory transfers, ₦15.27tn for non-debt recurrent expenditure, and ₦15.91tn for debt servicing. With total spending projected at ₦54.43tn, debt service alone accounts for 29.2% of the entire budget.
The proposed ₦20.10tn deficit represents 36.9% of total spending, meaning over one-third of expenditure would be financed through borrowing. By comparison, the 2025 budget carries a ₦9.22tn deficit. The gap planned for 2026 is more than double that—an increase of 118%.
For further perspective, the amended 2022 budget totalled ₦17.32tn, with ₦3.98tn spent on debt service. The 2026 debt-service projection of ₦15.91tn is ₦11.93tn higher—about 299% more in just four years. Recurrent spending has jumped from ₦7.11tn in 2022 to ₦15.27tn proposed for 2026, an increase of 115%, while capital spending has grown much more slowly.
Bagudu said the framework incorporates lessons from the 2025 budget and feedback from stakeholders across key sectors. He added that President Bola Tinubu has secured support from the National Economic Council to strengthen coordination between fiscal and monetary policy, reinforce security spending, curb revenue leakages in the oil, gas, and solid-minerals sectors, and scale up infrastructure investment.
Economists React
Experts have expressed concern over the planned ₦20.10tn deficit, arguing that its size, the timing of budget preparation, and the continued breakdown of the January–December budget cycle could worsen macroeconomic instability and increase investor uncertainty.
Dr. Muda Yusuf, Chief Executive of the Centre for the Promotion of Private Enterprise, warned that Nigeria must avoid slipping into a debt trap. He urged the government to leverage improving revenue performance to reduce the deficit rather than expand it.
Professor Sheriffdeen Tella of Olabisi Onabanjo University questioned the basis for preparing the 2026 budget when implementation of the 2025 budget had barely commenced. He argued that setting projections without performance indicators undermines credibility and risks creating overlapping budgets in the same year.
Professor Adeola Adenikinju, President of the Nigerian Economic Society, criticised the deviation from the January–December cycle and warned that the late preparation limits proper legislative scrutiny. He also questioned how the government intends to finance a deficit far above the 3% of GDP ceiling set by the Fiscal Responsibility Act, cautioning that heavy domestic borrowing could crowd out private-sector credit and drive up interest rates.
He added that the persistent delay in capital releases weakens the developmental impact of government spending and warned that continuous borrowing without productive outcomes could worsen inflation and destabilise the currency.
