President Tinubu
By Olamilekan Abayomi
The Federal Government of Nigeria is seeking to borrow N17.89 trillion in 2026 to finance its budget deficit, marking a 72% increase from the N10.42 trillion approved for 2025. This significant jump is largely driven by a decline in revenue projections, with federal revenue expected to drop by 23% to N29.35 trillion in 2026.
The bulk of the borrowing, approximately 80%, will come from domestic creditors, with the remaining 20% sourced from external lenders. This borrowing pattern is consistent with previous years, where domestic borrowing has dominated the government’s financing strategy.
The 2026 fiscal deficit is projected to rise to N20.12 trillion, up from N14.10 trillion in 2025, representing a 43% increase. Despite this growth, the deficit-to-GDP ratio is expected to decline from 4.17% in 2025 to 3.61% in 2026, driven by anticipated GDP growth.
Debt service costs are also on the rise, with payments projected to increase by 11% to N15.52 trillion in 2026. This will put pressure on the government’s revenue, with the debt service-to-revenue ratio expected to jump from 34% in 2025 to 45% in 2026, meaning nearly half of federal revenue will go towards servicing debt.
Experts have raised concerns about the sustainability of Nigeria’s debt, warning that the government risks falling into a debt trap. The heavy reliance on borrowing has sparked fears about the impact on inflation, exchange rate stability, and the overall economy.
The government has emphasized its commitment to improving the efficiency and quality of spending, with a focus on completing ongoing projects and managing fiscal pressure caused by weak revenues. The 2026 budget is expected to prioritize key areas such as national security, education, health, agriculture, and infrastructure development.
