Nigeria is heading into a far more precarious fiscal year in 2026, with the Federal Government projecting a deficit so large it exceeds the entire national budget of 2022 by ₦2.78tn, raising fears that the country is sliding deeper into a debt trap.
According to figures seen by Abuja Politico, the proposed 2026 shortfall—₦20.10tn—means Abuja expects to borrow more than one-third of its total ₦54.43tn spending plan, a scale analysts say could destabilise the fragile macroeconomic gains recorded in recent months. The projected deficit is more than double that of 2025 and represents a 118% increase, despite government claims of improved revenue performance.
Economists warned that without tighter expenditure controls, restored budget discipline, and more credible fiscal planning, Nigeria risks plunging into a full-blown fiscal crisis in 2026—one that would intensify pressure on households already battling inflation, currency volatility, and stagnating incomes.
The alarm comes after the Federal Executive Council approved the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) on Wednesday. The document, due before the National Assembly on Monday, sets out a projected total Federation revenue of ₦50.74tn next year, with the Federal Government’s share at ₦22.60tn and an overall federal revenue estimate of ₦34.33tn.
‘More debt than discipline’
Briefing State House correspondents, the Minister of Budget and Economic Planning, Atiku Bagudu, outlined the assumptions underpinning the draft: an oil price benchmark of $64.85 per barrel, an exchange rate of ₦1,512 to the dollar, and—for the first time—dual crude output figures. The industry is being pressed to deliver 2.06 million barrels per day, but the budget will be based on a more cautious 1.8 million barrels per day to create a “safety buffer” of 12.6%.
Bagudu projected economic growth of 4.68% in 2026 but warned that pre-election spending could put pressure on the weakening naira. He identified major spending lines, including statutory transfers of nearly ₦3tn, non-debt recurrent costs of ₦15.27tn, and a staggering ₦15.91tn in debt service—almost three out of every ten naira planned for expenditure.
For comparison, debt service in 2022 was ₦3.98tn. The 2026 figure represents a 299% jump within four years, reflecting the increasingly unsustainable weight of borrowing on Nigeria’s public finances. Recurrent costs have also ballooned, rising from ₦7.11tn in 2022 to ₦15.27tn for 2026, while capital spending has grown much more slowly.
Bagudu said the framework benefited from “technical discussions” and consultations across ministries, civil society and the private sector. He added that President Bola Tinubu had secured backing from the National Economic Council for closer coordination between fiscal and monetary policymakers, more investment in security institutions and renewed efforts to stem revenue losses in oil, gas and solid minerals.
Experts question the figures — and the timing
But leading economists say the entire planning process is on shaky ground.
Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said the deficit poses a direct threat to the fragile stability achieved recently. Nigeria, he warned, is “at risk of a debt trap” where rising borrowing costs “choke the fiscal space” and fuel a “vicious circle of debt”.
He cautioned that any disruption to the tentative macroeconomic recovery could trigger sharper inflation and deepen the currency crisis, adding that improved revenue performance should have allowed the government to reduce, not expand, its deficit.
Sheriffdeen Tella, professor of economics at Olabisi Onabanjo University, questioned the basis of the entire 2026 budget, noting that implementation of the 2025 plan had barely begun.
“There is no basis for any budget because what they had, they have not implemented,” he said, warning that Nigeria risks operating multiple budgets in one year—a sign of “fiscal disorder.” He criticised the ₦20tn deficit as arbitrary and disconnected from the performance of the current fiscal year.
Similar concerns were raised by the National President of the Nigerian Economic Society, Professor Adeola Adenikinju, who said Nigeria had once again drifted off the January–December budget cycle, undermining predictability for businesses and complicating oversight.
He argued that the late approval of the MTEF/FSP leaves the National Assembly with little time for scrutiny and creates an environment where ministries rush through spending plans with minimal analysis. “We are running two or three budgets in the same year,” he said. “It makes the whole process very disorganised.”
Adenikinju also warned that the 2026 deficit violates the Fiscal Responsibility Act, which caps deficits at 3% of GDP. Heavy government borrowing, he stressed, would push up interest rates, crowd out private investment, and worsen economic hardship.
He cautioned further that Nigeria’s tendency to release capital funds late in the year means borrowing often fails to deliver meaningful development outcomes. Persistent deficits without clear impact, he said, will deepen inflation and currency instability.
A budget season marked by rising risks
With debt service consuming nearly a third of projected spending and recurrent expenditure soaring, the 2026 framework signals a difficult year ahead—one defined by heightened borrowing, fragile revenues, and a budget process many analysts say is losing credibility.
Unless the government reins in its deficit, restores discipline to the fiscal calendar, and aligns spending with Nigeria’s development needs, economists fear 2026 could mark a deeper slide into structural fiscal distress.
