The Federal Government has presented a N54.43tn national budget for 2026, unveiling a financial plan marked by a record-breaking deficit and rising debt service obligations. With total revenue estimated at N50.74tn and a targeted economic growth rate of 4.68 per cent, the proposal underscores the administration’s attempt to steady the economy ahead of a critical pre-election year. However, the deficit—pegged at N20.10tn—now exceeds the entire amended 2022 national budget by N2.78tn, signalling a more challenging fiscal year ahead for Africa’s largest economy.
During a briefing after Wednesday’s Federal Executive Council meeting, Minister of Budget and Economic Planning, Atiku Bagudu, explained that the budget was built on conservative assumptions, including an oil price benchmark of $64.85 per barrel and an exchange rate estimate of N1,512 to the dollar. For the first time, the government adopted dual oil production projections—tasking producers with a 2.06 million barrels per day target while using a more cautious 1.8 million barrels per day benchmark to guide the budget. Bagudu said the buffer was necessary to guard against unexpected disruptions in crude output.
Despite revenue expectations from federal, state, and local governments, debt servicing continues to overshadow fiscal planning. Out of the proposed N54.43tn spending envelope, N15.91tn—representing 29.2 per cent of the entire budget—will go into servicing existing debts. Analysts warn that borrowing more than one-third of planned expenditure could intensify pressure on the exchange rate, worsen inflation, and expose the economy to deeper fiscal stress if revenue projections fall short.
Economists are raising red flags over what they describe as an increasingly unsustainable borrowing pattern and a breakdown of Nigeria’s traditional January-to-December budget cycle. Experts including Dr Muda Yusuf, Prof. Sheriffdeen Tella, and Prof. Adeola Adenikinju argue that late budget preparations, rising deficits, and inconsistent implementation threaten macroeconomic stability. They caution that running multiple overlapping budgets and ignoring deficit limits set by the Fiscal Responsibility Act could erode investor confidence and undermine growth.
The concerns come as Nigerians continue to grapple with rising living costs, unstable exchange rates, and fragile recovery signs. While the government says it aims to strengthen coordination between fiscal and monetary policies and improve revenue through tighter monitoring of oil and mineral resources, analysts insist that without disciplined spending, credible timelines, and a clearer link between borrowing and development outcomes, the 2026 fiscal plan may deepen rather than relieve economic pressures.
source: punch