Nigeria’s Senate has approved the 2026 to 2028 Medium Term Expenditure Framework and Fiscal Strategy Paper, providing a three-year fiscal roadmap that outlines the federal government’s spending priorities, revenue expectations and borrowing plans. The approval marks a critical step in Nigeria’s budget cycle and comes at a time when the country is grappling with weak revenue performance, elevated inflation and mounting debt service obligations.
Under the framework, total federal government expenditure over the period is projected at 54.46 trillion naira. To finance this spending, the government plans to borrow an additional 17.88 trillion naira to cover a substantial revenue shortfall. Aggregate government revenue is estimated at 34.33 trillion naira, underscoring the persistent gap between income and expenditure that has characterised Nigeria’s public finances for much of the past decade.
Debt servicing remains one of the most striking features of the plan. The framework puts debt service costs at 15.52 trillion naira over the period, consuming a significant share of projected revenue. While this represents an improvement compared to recent years when debt service absorbed more than half of federal revenue, it continues to constrain fiscal space and limits the government’s ability to scale up social and infrastructure spending without further borrowing.
Capital expenditure is pegged at 20.13 trillion naira, signalling the government’s intention to prioritise infrastructure development, including transport, energy and housing. Recurrent non-debt expenditure is projected at 15.27 trillion naira, covering salaries, overheads and the running costs of government institutions. Lawmakers who supported the framework argued that the balance between capital and recurrent spending reflects an effort to shift resources towards growth-enhancing investments while maintaining basic government functions.
The macroeconomic assumptions underpinning the framework are central to its credibility. Oil price benchmarks are set at 60 dollars per barrel in 2026, rising gradually to 70 dollars per barrel by 2028. Crude oil production is projected to increase to 1.92 million barrels per day by 2028, a level that would mark a significant recovery from recent years when output was repeatedly disrupted by oil theft, pipeline vandalism and underinvestment.
Oil remains Nigeria’s single largest source of foreign exchange and a key contributor to government revenue, despite efforts to diversify the economy. As a result, the feasibility of the MTEF depends heavily on the government’s ability to stabilise oil production and benefit from favourable global prices. Any sustained shock to oil markets or a failure to meet production targets would widen fiscal deficits and increase borrowing needs.
The framework also projects a gradual easing of inflation to nine percent by 2028. This is an ambitious assumption given that Nigeria has experienced double-digit inflation for most of the past decade, driven by currency depreciation, supply-side constraints and high energy costs. Achieving single-digit inflation would require tight monetary policy, improved food supply chains and greater exchange rate stability, all of which remain uncertain.
On growth, the government is projecting a strong rebound, with gross domestic product growth expected to rise to 7.9 percent by 2028. This forecast reflects optimism that recent economic reforms, including fuel subsidy removal, exchange rate liberalisation and tax administration changes, will begin to yield productivity gains. It also assumes increased private sector investment and improved confidence as macroeconomic stability strengthens.
The economic implications of the approved framework are mixed. On the positive side, the emphasis on capital spending and growth suggests a recognition that Nigeria cannot cut its way out of its fiscal challenges. Infrastructure investment has the potential to unlock private sector activity, reduce business costs and support job creation. If growth accelerates as projected, it could help expand the tax base and gradually ease fiscal pressures.
However, the scale of planned borrowing raises concerns about debt sustainability, particularly in an environment of high global interest rates. Although Nigeria’s debt-to-GDP ratio remains relatively low compared to some peers, the more pressing issue is the government’s limited revenue base. Without a significant improvement in non-oil revenue mobilisation, higher debt levels risk crowding out essential spending and increasing vulnerability to external shocks.
The Senate’s endorsement of the MTEF reflects a political judgement that the assumptions are realistic and achievable. Yet the framework ultimately represents a statement of intent rather than a guarantee of outcomes. Its success will depend on consistent policy implementation, improved governance in the oil sector and sustained efforts to boost revenue through tax reform and economic diversification.
As Nigeria enters another medium-term planning cycle, the approved framework highlights the difficult trade-offs facing policymakers. Balancing growth ambitions with fiscal discipline remains a central challenge, and the coming years will test whether the government can translate projections into tangible economic improvement for households and businesses alike.
