… Yusuf urged federal government to leverage improving revenues to reduce deficits:“We need to worry about debt sustainability. High deficits and high debt levels can choke the fiscal space and threaten the macroeconomic stability we have achieved.”
ABUJA, NIGERIA- The iNews Times | The Federal Government plans to borrow N17.89tn in 2026 to finance a widening budget deficit as revenue projections fall far below spending needs, according to the 2026 budget framework obtained from the Budget Office of the Federation.
Figures in the 2026 Abridged Budget Call Circular released by the Ministry of Budget and Economic Planning show that new borrowing will rise sharply from N10.42tn in 2025 to N17.89tn in 2026, an increase of N7.46tn or 72 per cent in one year, despite concerns over escalating debt-servicing costs.
The borrowing surge is driven by a larger fiscal deficit and a weaker revenue outlook, even though overall expenditure is expected to decline slightly year-on-year. The framework projects a 2026 fiscal deficit of N20.12tn, up from N14.10tn approved for 2025, an increase of 43 per cent. However, the deficit-to-GDP ratio is expected to fall from 4.17 per cent in 2025 to 3.61 per cent in 2026, due to a higher GDP base. The ratio is forecast to ease further to 3.24 per cent in 2027 and 1.92 per cent in 2028.
Available revenue for the federal budget excluding government-owned enterprises is projected to drop from N38.02tn in 2025 to N29.35tn in 2026, a decline of N8.67tn, or 23 per cent. Revenue is expected to recover modestly to N31.53tn in 2027 and N34.90tn in 2028, but not enough to significantly reduce borrowing needs.
Most of the borrowing in 2026 will come from the domestic market. Of the N17.89tn planned, N14.31tn (80%) will be raised locally, while N3.58tn (20%) will come from external sources.
This trend is consistent with previous and future projections:
- 2025: 82% domestic, 18% external
- 2027: N21.18tn total borrowing (80% domestic, 20% external)
- 2028: N15.84tn total (80% domestic, 20% external)
Across 2026–2028, the government expects to borrow N54.91tn, of which N43.92tn (80%) will come from domestic lenders and N10.98tn (20%) from foreign creditors.
Borrowing rises from N17.89tn in 2026 to N21.18tn in 2027 (up 18 per cent), before falling to N15.84tn in 2028 (down 25 per cent).
Debt service is projected to increase from N13.94tn in 2025 to N15.52tn in 2026, an 11 per cent rise.
The debt-service-to-revenue ratio shows a worsening trend:
- 2025: 34%
- 2026: 45%
- 2027: 53%
- 2028: 47%
This means that in 2026, nearly one out of every two naira of federal revenue will go to servicing debt.
Total federal expenditure is expected to decline slightly from N54.99tn in 2025 to N54.46tn in 2026, but recurrent spending and debt service continue to dominate the budget.
- Recurrent non-debt spending: rises from N13.59tn (2025) to N15.27tn (2026)
- Personnel costs: N8.36tn
- Pensions/gratuities: N1.38tn
- Service-wide votes: increase from N1.06tn to N1.85tn
- Capital expenditure: falls from N26.19tn (2025) to N22.37tn (2026), mainly because MDAs will roll over 70% of their 2025 capital allocations. Capex is projected to rise to N23.28tn in 2027, then drop to N21.26tn in 2028.
Privatisation proceeds:
- 2025: N312.33bn
- 2026: N189.16bn
- 2027: N197.23bn
- 2028: N486.54bn (still <3% of total financing)
Project-tied loans from multilateral/bilateral partners fall sharply from N3.36tn (2025) to:
- N2.05tn in 2026
- N1.17tn in 2027
- N556.66bn in 2028
Economists told newsmen that the deficit, over one-third of the proposed N54.43tn spending plan raises fresh concerns about debt sustainability and Nigeria’s ability to maintain recent macroeconomic stability.
The CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, warned that rising deficits and mounting debt could undermine fragile economic recovery. He cautioned that Nigeria risks “a vicious circle of debt” if borrowing continues at this pace.
Yusuf urged federal government to leverage improving revenues to reduce deficits:
“We need to worry about debt sustainability. High deficits and high debt levels can choke the fiscal space and threaten the macroeconomic stability we have achieved.”
President of the Nigerian Economic Society, Prof. Adeola Adenikinju, warned that heavy domestic borrowing will crowd out the private sector, raise interest rates, and worsen economic hardship.
He added that debt is not necessarily harmful, but Nigeria’s slow and inefficient capital spending limits development impact.
At a national debt dialogue in Abuja on Tuesday, participants warned that Nigeria is accumulating debts that future generations will bear without seeing the benefits.
Ikenna Ofoegbu of the Heinrich Böll Stiftung said debt figures often appear abstract but have real consequences:
- Nigeria’s debt profile stands at N152.4bn (about $99.66bn), he noted.
- Flood disasters costing $9.12bn illustrate how climate change and inadequate infrastructure multiply future liabilities.
He criticised the lack of transparency in borrowing and in capital budgeting and urged citizens to demand accountability.
Folahan Johnson, Executive Director of CISD, said the true cost of debt is reflected in human suffering, out-of-school children and women denied healthcare.
BudgIT’s Acting Country Director, Joseph Amenaghawon, said Nigeria faces “debt without development,” as loans increasingly fund recurrent costs rather than transformational projects.
He argued that the debt crisis is part of a broader governance and development failure:
“What we face today is a structural development crisis of priorities, governance, and vision.”
Amenaghawon called for strict monitoring of every loan and project to ensure measurable results and prevent future generations from carrying the burden of today’s fiscal choices.
