FG Projects N50.74tn Revenue for 2026 as Record N20tn Deficit Sparks Economic Concerns

FG Projects N50.74tn Revenue for 2026 as Record N20tn Deficit Sparks Economic Concerns

The Federal Government has projected a total revenue of N50.74 trillion for 2026, alongside a targeted economic growth rate of 4.68%. However, the proposed 2026 budget deficit has ballooned to N20.10 trillion, a figure that surpasses the entire 2022 national budget by N2.78 trillion, The PUNCH reports.

The widening deficit indicates that the government may borrow over 16% more than Nigeria’s total spending in 2022, raising fears of deeper fiscal pressure. Analysts warn that without tighter expenditure control, improved efficiency, and a stable budget cycle, Nigeria could slip into severe fiscal distress, threatening recent macroeconomic stability and increasing hardship for households and businesses in 2026.

These concerns follow the Federal Executive Council’s approval of the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) on Wednesday. Minister of Budget and Economic Planning, Atiku Bagudu, confirmed that the document would be forwarded to the National Assembly on Monday.

Cautious Benchmarking and Oil Production Assumptions

Bagudu explained that the framework is based on a conservative oil price benchmark of $64.85 per barrel and an exchange rate projection of N1,512/$. For the first time, the government adopted dual crude oil production estimates—2.06 million barrels per day as a target, with a more realistic 1.8mbpd benchmark to cushion potential disruptions.

He emphasized that although the benchmark price is lower than typical Bonny Light earnings, caution was necessary given global market volatility.

The minister also acknowledged that heightened political spending ahead of the 2027 elections could put further pressure on the naira.

Revenue Breakdown and Spending Priorities for 2026

Bagudu listed projected Federation revenue for 2026 at N50.74tn, divided as follows:

• Federal Government: N22.60tn
• States: N16.30tn
• Local Governments: N11.85tn

The Federal Government expects a total revenue of N34.33tn, including N4.98tn from government-owned enterprises, representing a 16% decline from the 2025 estimate.

Key expenses include:

• Statutory transfers: ~N3tn
• Non-debt recurrent expenditure: N15.27tn
• Debt service: N15.91tn

Debt service alone is projected to consume 29.2% of the entire 2026 budget, meaning nearly three out of every ten naira will go toward paying debt.

Deficit Soars to N20.10tn

With a spending plan of N54.43tn, the FG plans to run a deficit of N20.10tn, representing 36.9% of total expenditure. This means Nigeria plans to borrow over one-third of its entire 2026 budget.

For context:

• 2025 budget: N54.99tn with a N9.22tn deficit
• 2026 projected deficit: More than double 2025 levels (118% increase)
• Amended 2022 budget: N17.32tn, with debt service at N3.98tn

In contrast, the proposed 2026 debt service of N15.91tn is nearly 300% higher than in 2022.

Recurrent spending has also surged by 115% between 2022 (N7.11tn) and 2026 (N15.27tn), while capital expenditure growth remains sluggish.

Economists Raise Red Flags Over Fiscal Sustainability

Economists have expressed deep concern over the ballooning deficit, warning it could destabilize the economy in 2026.

Muda Yusuf: Risk of a Debt Trap

Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, cautioned that Nigeria risks entering a debt trap.

He noted that although revenue performance is improving, the government should use these gains to reduce borrowing, not expand it. Yusuf warned that losing recent macroeconomic gains could worsen inflation and weaken the naira.

Prof. Sheriffdeen Tella: Fiscal Disorder and Poor Budget Timing

Prof. Sheriffdeen Tella of Olabisi Onabanjo University criticized the government for preparing the 2026 budget when implementation of the 2025 budget had barely begun.

He argued that preparing a new budget without performance indicators from 2025 “erodes credibility” and suggested rolling over the 2025 budget instead of creating another document.

Tella also warned that Nigeria risks operating multiple budgets simultaneously, describing the situation as fiscal chaos.

Prof. Adeola Adenikinju: Violations of Budget Law and Investor Risks

President of the Nigerian Economic Society, Prof. Adeola Adenikinju, faulted Nigeria’s continued drift away from the January–December budget cycle, saying late presentation undermines economic planning and investment confidence.

He reminded the government that the Fiscal Responsibility Act caps budget deficits at 3% of GDP, cautioning that the projected deficit far exceeds this legal threshold.

Adenikinju further warned that excessive domestic borrowing will:

• Push interest rates higher,
• Crowd out private sector borrowing,
• Slow economic growth, and
• Increase inflationary pressures.

He emphasized that debt is only beneficial when used for timely, productive capital projects—an area in which Nigeria continues to struggle due to late capital releases.

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