The federal government has unveiled plans to borrow ₦17.89 trillion or about $12 billion from both domestic and foreign sources to cover the ₦20.12 trillion deficit in the 2026 national budget.
According to the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning, ₦14.31 trillion—representing 80% of the borrowing—will be sourced from the domestic market, while ₦3.58 trillion (20%) will come from external creditors.
The circular projects total borrowing to rise from ₦17.89 trillion in 2026 to ₦21.18 trillion in 2027, before dropping to ₦15.84 trillion in 2028. The 2026 deficit marks a 43% increase compared to the ₦14.10 trillion deficit recorded in the 2025 budget.
The document shows that Nigeria’s deficit-to-GDP ratio is expected to decline from 4.17% in 2025 to 3.61% in 2026, reflecting a higher projected GDP base.
The ratio is projected to ease further to 3.24% in 2027 and 1.92% in 2028.
Debt service costs, however, are expected to climb from ₦13.94 trillion in 2025 to ₦15.52 trillion in 2026—an increase of ₦1.58 trillion.
The cost of servicing debt compared to revenue may stand at 45% in 2026, rise to 53% in 2027, and before easing to 47% in 2028.
Spending Priorities
Total federal expenditure is projected to edge down slightly from ₦54.99 trillion in 2025 to ₦54.46 trillion in 2026. Yet the composition of spending continues to tilt heavily toward recurrent items and debt service.
Recurrent non-debt expenditure is expected to rise from ₦13.59 trillion in 2025 to ₦15.27 trillion in 2026. Of this, ₦8.36 trillion will go to personnel costs for ministries and departments, while pensions, gratuities, and retirees’ benefits will consume ₦1.38 trillion.
Other service-wide votes, including key national programmes, are set to rise from ₦1.06 trillion in 2025 to ₦1.85 trillion in 2026.
Capital expenditure, however, is being reduced from ₦26.19 trillion in 2025 to ₦22.37 trillion in 2026.
The government plans to roll over 70% of the 2025 capital allocations for ministries, departments, and agencies (MDAs) into 2026.
Framework and Legislative Action
The circular explained that MDAs’ budget ceilings for 2026 will be set at 70% of their 2025 project allocations.
This approach is based on the government’s commitment to release 30% of the 2025 capital budget within the current fiscal year, with the remaining 70% retained as the foundation for the 2026 budget rather than undergoing a traditional roll-over process.
Meanwhile, President Bola Tinubu has forwarded the 2026–2028 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the National Assembly for consideration and approval.
In his correspondence, read on the Senate floor by Deputy Senate President Barau Jibrin, Tinubu said the fiscal documents—endorsed by the Federal Executive Council on December 3, 2025—were being submitted “for the kind consideration and approval of the distinguished senators.”
He urged lawmakers to give the request “expeditious legislative action.”
The documents have been referred to the Senate Committee on Finance, which has been directed to submit its report by December 17, 2025.
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