FG Raises 2026 Borrowing Plan to N29.2tn as Budget Deficit Widens
- Nigeria's Federal Government has increased its 2026 borrowing plan to N29.2 trillion
- Borrowing will account for deficit financing, with limited contributions from other sources
- Analysts say the key issue remains how effectively borrowed funds are utilised for development
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Nigeria’s federal government has increased its borrowing plan for 2026 to N29.2 trillion following an expansion of the proposed budget, according to documents obtained by The PUNCH.
The revised figure represents an increase of N11.31 trillion from the earlier N17.89 trillion projection contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning.
Source: UGC
Budget expansion drives higher borrowing
Details from the 2026 Appropriation Bill approved by the National Assembly show that total debt financing has risen sharply as expenditure outpaces revenue projections.
The budget size is estimated at N68.32 trillion, while projected revenue stands at N36.87 trillion, leaving a fiscal deficit of N31.46 trillion.
Findings indicate that borrowing will account for the bulk of deficit financing, with other sources contributing relatively small amounts. Asset sales and privatisation are expected to generate N189.16 billion, while multilateral and bilateral loans are projected at N2.05 trillion.
Revenue projections and spending breakdown
The federal government expects to generate N25.92 trillion from federation revenues, N4.31 trillion from independent revenues, and N5.85 trillion from government-owned enterprises. Additional inflows include N1.37 trillion in aid and grants and N300 billion from special funds.
On the expenditure side, debt servicing is projected at N15.81 trillion, making it one of the largest components of the budget.
Recurrent non-debt spending is estimated at N15.43 trillion, while capital expenditure stands at N32.29 trillion, reflecting allocations to infrastructure and development. Statutory transfers are put at N4.80 trillion.
Despite the relatively high capital allocation, analysts note that debt servicing and recurrent spending continue to dominate, limiting fiscal flexibility.
Tinubu’s request and legislative adjustments
Earlier, Bola Tinubu requested a N9.09 trillion increase in the 2026 budget, citing anticipated gains from crude oil linked to the United States-Iran conflict and plans to secure new loans.
However, analysis shows that the approved budget of N68.32 trillion exceeds the executive’s revised proposal by about N1 trillion.
Lawmakers said the upward revision aims to settle legacy obligations, fund infrastructure, strengthen the judiciary, support healthcare, and prepare for the 2027 general elections.
Telecoms, oil benchmark to boost revenue
To support funding, the government plans to increase the oil benchmark by $10 per barrel, expected to generate about N2.592 trillion in additional revenue.
The telecommunications sector is also projected to contribute significantly, with MTN Nigeria expected to generate N724 billion in company income tax, while Airtel Nigeria is projected to contribute N150 billion.
Despite these measures, lawmakers approved an increase in external borrowing by N6.163 trillion to bridge the financing gap.
Concerns over rising debt profile
The Senate of Nigeria had earlier approved a request by the president to secure fresh external loans totalling $6 billion to support the budget.
The decision has drawn criticism from opposition figures and economic experts.
Former presidential candidate Atiku Abubakar described the move as “alarming,” warning that excessive borrowing could worsen Nigeria’s debt burden and affect future generations.
Similarly, Olajide Filani called for greater transparency and fiscal discipline, arguing that higher oil revenues should reduce, rather than increase, borrowing.
Source: Getty Images
Experts warn of debt sustainability risks
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, cautioned against rising deficits, noting the risk of a debt trap.
He warned that high debt levels could undermine macroeconomic stability and trigger inflationary and exchange rate pressures.
Also, President of the Nigerian Economic Society, Adeola Adenikinju, questioned the effectiveness of government spending, noting that delayed capital releases often weaken development outcomes.
At a policy dialogue, stakeholders, including Joseph Amenaghawon, raised concerns that borrowing has not translated into meaningful development, warning of a cycle of “debt without development.”
Development economist Aliyu Ilias said the scale of new borrowing could worsen inflation and increase the cost of living if not properly managed.
He noted that while borrowing can support growth, its impact depends largely on how funds are utilised.
According to him, weak implementation of capital projects and delays in budget execution remain key challenges, reducing the effectiveness of government spending.
Atiku reacts as Senate passes 2026 budget
Legit.ng earlier reported that Nigerian opposition leader Atiku Abubakar criticised the reported swift approval of a $6 billion external loan request by President Bola Tinubu.
Atiku described the process as a dangerous erosion of legislative oversight that threatens the country’s economic stability.
Earlier, President Tinubu asked the National Assembly to approve adjustments to the 2026 appropriation bill, proposing an increase of N9 trillion.
Source: Legit.ng
