Nigeria’s Federal Government has significantly increased its planned borrowing for the 2026 fiscal year to N29.20 trillion, reflecting mounting fiscal pressures driven by a widening budget deficit and expanded expenditure framework.
The revised borrowing estimate, contained in the 2026 Appropriation Bill approved by the National Assembly, marks a sharp increase of N11.31 trillion from the earlier projection of N17.89 trillion outlined in the 2026 Abridged Budget Call Circular issued in December 2025.
The updated figures highlight a notable shift in the country’s fiscal outlook, with government finances coming under increasing strain as spending continues to outpace revenue generation.
Rising deficit drives borrowing needs
At the heart of the increased borrowing plan is a substantial rise in the fiscal deficit, now estimated at N31.46 trillion. Total government expenditure is projected at N68.32 trillion, while expected revenue stands at N36.87 trillion, leaving a significant financing gap.
This imbalance has forced the government to rely heavily on debt financing, with borrowing expected to account for the bulk of deficit funding. Other funding sources remain relatively limited in comparison, including N189.16 billion projected from asset sales and privatisation, as well as N2.05 trillion expected from multilateral and bilateral project-linked loans.
The previous borrowing estimate of N17.89 trillion had been based on a much lower deficit projection of N20.12 trillion, underscoring the scale of the upward revision in both spending and financing requirements.
Revenue growth fails to match expenditure expansion
Although government revenue projections for 2026 have improved, they remain insufficient to keep pace with the rapid expansion in expenditure.
Total revenue is expected to reach N36.87 trillion, supported by multiple streams including federation revenues, internally generated income, and earnings from government-owned enterprises. A breakdown shows that federation revenues are projected at N25.92 trillion, while independent revenues are expected to contribute N4.31 trillion. Government enterprises are forecast to generate N5.85 trillion, with additional inflows of N1.37 trillion from grants and aid, alongside N300 billion from special funds.
Despite these gains, the faster growth in expenditure continues to widen the fiscal gap, reinforcing the government’s dependence on borrowing.
One of the most pressing concerns within the 2026 budget framework is the rising cost of debt servicing, which is projected at N15.81 trillion. This represents a significant portion of total expenditure and underscores the growing burden of managing both domestic and external debt obligations.
Further breakdown shows that domestic debt servicing will account for N10.16 trillion, while foreign debt servicing is estimated at N5.36 trillion.
In addition to debt servicing, recurrent non-debt expenditure is projected at N15.43 trillion. Capital expenditure, which reflects government spending on infrastructure and development projects, is estimated at N32.29 trillion, indicating a strong commitment to long-term economic growth. Statutory transfers are expected to total N4.80 trillion.
