The Federal Government is preparing to borrow N17.89tn in 2026 to fund a growing budget deficit as revenues plunge far below expenditure needs, according to the 2026 budget framework obtained from the Budget Office of the Federation.
Figures contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning show that projected borrowing will jump from N10.42tn in 2025 to N17.89tn in 2026 — a sharp increase of N7.46tn, representing about 72 per cent year-on-year.
The government attributes the spike to a wider fiscal deficit and weakening revenue outlook, even though total spending for 2026 is projected to drop slightly compared to 2025. The fiscal deficit is expected to rise to N20.12tn in 2026, up from the N14.10tn approved for 2025 — a 43 per cent increase.
Despite the nominal increase, the deficit-to-GDP ratio is projected to fall from 4.17 per cent in 2025 to 3.61 per cent in 2026 due to a higher GDP forecast. The ratio is expected to decline further to 3.24 per cent in 2027 and 1.92 per cent in 2028.
Revenue Falls by N8.67tn
Revenue available for federal spending — excluding government-owned enterprises — is projected to slump from N38.02tn in 2025 to N29.35tn in 2026, a 23 per cent decline. Modest recovery is anticipated thereafter, with revenue projected at N31.53tn in 2027 and N34.90tn in 2028, though not strong enough to eliminate heavy borrowing needs.
80% of Borrowing to Come from Domestic Market
The 2026 borrowing plan heavily favours domestic creditors, who will provide N14.31tn (80 per cent), while external lenders will contribute N3.58tn (20 per cent). The same pattern is projected for 2027 and 2028.
Between 2026 and 2028, the government plans to borrow a total of N54.91tn — with domestic borrowing accounting for N43.92tn and external borrowing amounting to N10.98tn.
Debt Service Hits N15.52tn in 2026
Debt service costs continue to rise, increasing from N13.94tn in 2025 to N15.52tn in 2026. The debt service-to-revenue ratio is expected to jump from 34 per cent in 2025 to 45 per cent in 2026, meaning nearly half of available revenue will go toward servicing existing debt. The ratio is projected to climb to 53 per cent in 2027 before moderating to 47 per cent in 2028.
Recurrent Spending Rises, Capital Expenditure Falls
Total spending is projected to fall slightly from N54.99tn in 2025 to N54.46tn in 2026. However, recurrent non-debt expenditure will rise from N13.59tn to N15.27tn. Personnel costs will take N8.36tn, while pensions and gratuities will cost N1.38tn.
Capital expenditure will drop sharply from N26.19tn in 2025 to N22.37tn in 2026, largely because ministries will roll over 70 per cent of their 2025 capital allocations rather than seek new approvals. Capital spending is expected to recover to N23.28tn in 2027 before easing to N21.26tn in 2028.
Privatisation proceeds remain marginal, falling from N312.33bn in 2025 to N189.16bn in 2026. Project-tied loans are also projected to decline steadily from N3.36tn in 2025 to N556.66bn in 2028.
Experts Warn of Debt Trap, Higher Interest Rates, Future Burden
Economists say the widening deficit and surging borrowing plans raise red flags for debt sustainability and macroeconomic stability.
The CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, warned that Nigeria risks slipping into a “debt trap” if borrowing continues unchecked. He noted that recent economic stability could be reversed by rising deficits, which may fuel inflation and weaken the naira.
“We need to worry about debt sustainability. High levels of deficits and high levels of debt can choke the fiscal space and create a vicious circle,” he said.
Similarly, the National President of the Nigerian Economic Society, Professor Adeola Adenikinju, cautioned that heavy domestic borrowing would crowd out the private sector, push up interest rates, and slow investment.
He argued that borrowing is not inherently bad but must be tied to productive, timely capital projects — a major weakness in Nigeria’s spending pattern.
At a recent national dialogue on debt sustainability in Abuja, experts expressed concern that Nigeria’s rising debt burden is not translating into development, warning that future generations will pay for loans that delivered little visible progress.
Programme Manager at Heinrich Böll Stiftung, Mr Ikenna Ofoegbu, stressed that debt figures have real human costs. He linked poor infrastructure and climate impacts to the economic strain, noting that “our children will inherit these debts.”
BudgIT’s Acting Country Director, Joseph Amenaghawon, said Nigeria is facing a “structural development crisis,” not merely a debt problem.
“For every loan that remains unaccounted for, a potential generation of youth is left behind,” he said, calling for strict transparency, project monitoring, and accountability.
Call for Transparency and Fiscal Discipline
Speakers urged the government to align borrowing with measurable development goals and ensure that every project tied to loans is traceable and beneficial to communities.
They warned that unless reforms are implemented, Nigeria risks deepening a cycle of “debt without development.”
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