…over a three-year period from 2026 to 2028, the government plans to borrow a total of ₦54.91tn.
Abuja, Nigeria — The iNews Times | The Federal Government plans to borrow a record ₦17.89tn in 2026 to finance a widening budget deficit as revenues fall sharply below expenditure needs, according to the 2026 budget framework obtained from the Budget Office of the Federation. The new figures contained in the Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning indicate that total borrowing will rise steeply from ₦10.42tn in 2025 to ₦17.89tn in 2026, marking a 72 per cent increase within a single year and reinforcing lingering concerns about the country’s rising debt burden.
Despite a slight reduction in overall expenditure compared with the current year, the government’s financing needs are expanding due to a larger fiscal deficit and weaker revenue outlook. The 2026 deficit is projected at ₦20.12tn, up from the ₦14.10tn approved for 2025, representing a 43 per cent year-on-year increase. Yet, owing to a higher expected GDP base, the deficit-to-GDP ratio is forecast to decline from 4.17 per cent in 2025 to 3.61 per cent in 2026. The ratio is projected to fall further to 3.24 per cent in 2027 and 1.92 per cent in 2028, creating the appearance of improved fiscal discipline despite the ballooning nominal deficit.
Revenue projections explain much of the government’s increasing dependence on debt. Available federal revenue, excluding the retained earnings of government-owned enterprises, is expected to fall from ₦38.02tn in 2025 to ₦29.35tn in 2026 a sharp 23 per cent decline. Although revenues are projected to recover modestly to ₦31.53tn in 2027 and ₦34.90tn in 2028, the recovery is insufficient to offset spending pressures or reduce the government’s appetite for borrowing. Over the three-year period from 2026 to 2028, the government plans to borrow a total of ₦54.91tn, of which ₦43.92tn, representing 80 per cent will come from domestic creditors, while ₦10.98tn will be sourced externally.
The document shows that the pattern of leaning heavily on the domestic market will continue in the coming years. Of the ₦17.89tn expected to be borrowed in 2026, ₦14.31tn will be raised locally, while ₦3.58tn will be obtained from external lenders. In 2027, borrowing is projected to rise to ₦21.18tn, with ₦16.94tn coming from domestic creditors. By 2028, borrowing is expected to fall to ₦15.84tn, but the domestic share remains dominant at ₦12.67tn. Analysts warn that this pattern could crowd out private-sector access to credit, push interest rates upward, and deepen economic hardship.
Debt service obligations are also increasing. The framework projects debt service costs at ₦13.94tn for 2025 and ₦15.52tn for 2026, an 11 per cent rise. The debt service-to-revenue ratio is forecast to jump from 34 per cent in 2025 to 45 per cent in 2026, meaning nearly half of the Federal Government’s revenue will be spent on servicing existing debts. The ratio is expected to climb further to 53 per cent in 2027 before easing to 47 per cent in 2028.
Although total federal spending is expected to fall slightly from ₦54.99tn in 2025 to ₦54.46tn in 2026, recurrent expenditure and debt service continue to dominate the budget, squeezing the fiscal space for new capital projects. Recurrent non-debt spending is projected to rise from ₦13.59tn to ₦15.27tn. Within this category, personnel costs for ministries and departments will take ₦8.36tn, while pensions, gratuities, and retirees’ benefits will cost ₦1.38tn. Service-wide votes for key national programmes will rise significantly from ₦1.06tn to ₦1.85tn.
Capital expenditure is expected to drop from ₦26.19tn in 2025 to ₦22.37tn in 2026. The reduction is tied to a policy decision allowing ministries and agencies to roll over 70 per cent of their 2025 capital budgets into 2026, limiting the need for fresh appropriations. Capital spending is projected to increase modestly to ₦23.28tn in 2027 before falling again to ₦21.26tn in 2028.
Other financing items remain relatively small in comparison to borrowing. Privatisation proceeds are expected to fall from ₦312.33bn in 2025 to ₦189.16bn in 2026, before rising to ₦486.54bn in 2028. Project-tied loans from multilateral and bilateral partners are also projected to fall from ₦3.36tn in 2025 to ₦2.05tn in 2026 and then decline sharply by 2028.
Fiscal experts warn that Nigeria’s growing deficit and heavy reliance on borrowing raise serious concerns about debt sustainability, inflationary risks, and exchange rate stability. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, cautioned that Nigeria risks slipping into a debt trap that could choke the economy. He argued that the country had only recently regained some macroeconomic stability and that any misstep in fiscal management could trigger renewed inflationary and exchange-rate pressures.
Similarly, the President of the Nigerian Economic Society, Professor Adeola Adenikinju, warned that the government’s overreliance on domestic borrowing would crowd out private-sector investment, drive up interest rates, and worsen economic conditions. He stressed that borrowing could be justified only if funds are channelled into productive, transformative projects a condition he said is rarely met due to Nigeria’s poor track record of timely capital releases.
Civil society voices at a national debt dialogue in Abuja described the emerging situation as “debt without development,” warning that Nigeria is accumulating liabilities that future generations will bear without enjoying the benefits such borrowing is meant to produce. The Programme Manager of the Sustainable Nigeria Programme at Heinrich Böll Stiftung, Mr. Ikenna Ofoegbu, described Nigeria’s debt as a burden that will fall on future children, linking fiscal pressures to climate disasters and the enormous cost of rebuilding damaged infrastructure.
The Executive Director of the Centre for Inclusive Social Development, Mr. Folahan Johnson, said the human impact of excessive borrowing is already evident in the rise of out-of-school children and the inability of women to access basic maternal health care. BudgIT’s Acting Country Director, Mr. Joseph Amenaghawon, warned that Nigeria faces a deeper structural development crisis rooted in governance, transparency, and misaligned priorities. He argued that borrowing, though necessary, has not translated into meaningful development and risks leaving young Nigerians behind.
He called for a new era of accountability in which every loan is traceable, every project verifiable, and every outcome measurable, insisting that Nigeria must transform debt from a burden into a bridge to a more prosperous future.
