Federal Government Expands Borrowing Plan for 2026
The Federal Government has significantly increased its borrowing plan for 2026 to N29.20tn, according to official documents. This represents a rise of N11.31tn from the earlier N17.89tn borrowing projection outlined in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning.
The new borrowing estimate is included in the 2026 Appropriation Bill, approved by the National Assembly, and detailed in the House of Representatives Order Paper dated Tuesday, March 31, 2026, as well as in the budget schedule attached to the proposal.
Findings indicate that total debt financing for 2026 is now estimated at N29.2tn, reflecting a sharp upward revision due to significant increases in expenditure beyond earlier projections. The expansion is driven by a widening fiscal deficit, with total spending estimated at N68.32tn and aggregate revenues projected at N36.87tn, leaving a deficit of N31.46tn.
A breakdown of the financing plan shows that while the bulk of the deficit will be funded through borrowing, other sources remain relatively small. Asset sales and privatisation are projected at N189.16bn, while multilateral and bilateral project-tied loans are expected to contribute N2.05tn.
The earlier 2026 borrowing projection of N17.89tn was based on a lower deficit estimate of N20.12tn contained in the budget call circular released in December 2025 by the Federal Ministry of Budget and Economic Planning. However, the latest figures indicate that both the deficit and borrowing needs have risen sharply.
Revenue for 2026 is now projected at N36.87tn, driven by federation revenues, independent revenues, and inflows from government-owned enterprises. Specifically, the Federal Government expects to earn N25.92tn as its share of gross federation revenues, N4.31tn from independent revenues, and N5.85tn from government-owned enterprises. Other inflows include N1.37tn in aid and grants and N300bn from special funds.
On the expenditure side, debt service will account for N15.81tn, making it one of the largest spending components in the budget. Recurrent non-debt expenditure is projected at N15.43tn, while capital expenditure is estimated at N32.29tn, reflecting a strong allocation to infrastructure and development projects. Statutory transfers are put at N4.80tn.
Despite the relatively large capital allocation, analysis shows that debt service and recurrent spending continue to dominate the budget structure, limiting fiscal flexibility. Further details indicate that domestic debt service will cost N10.16tn, while foreign debt service is estimated at N5.36tn, highlighting the growing burden of debt obligations.
The sharp increase in borrowing comes even as the government projects higher revenues compared to earlier estimates, suggesting that expenditure growth has outpaced revenue gains.
Legislative Responses and Concerns
The Senate earlier approved Tinubu’s request to secure fresh external loans totalling $6bn, aimed at plugging fiscal gaps and financing key infrastructure projects. The move has attracted criticism from opposition parties and economic experts.
Former presidential candidate of the Peoples Democratic Party, Atiku Abubakar, condemned the Senate’s swift approval of President Bola Tinubu’s request for a fresh external loan. He described the move as “not just troubling but alarming,” warning that such decisions could further burden Nigeria’s already strained economy and mortgage the future of generations yet unborn.
He further emphasised that prudence, not haste, should guide fiscal decisions. “Borrowing is not inherently wrong, but reckless borrowing, enabled by legislative complacency, is dangerous. Nigeria is not a private enterprise to be leveraged at will. The future of our nation cannot be signed away in a matter of hours,” he said.
A presidential aspirant on the platform of the Young Progressives Party, Olajide Filani, called for transparency and fiscal discipline as the Federal Government plans to obtain a fresh $6bn loan. Filani expressed concern over the borrowing plan, warning that additional loans could worsen Nigeria’s debt burden at a time when crude oil prices are reportedly above budget benchmarks.
He said, “A nation benefiting from improved oil earnings should not be sinking deeper into debt,” adding that, “Ordinarily, higher oil revenues should translate into economic relief for citizens, not fresh borrowing.”
Expert Warnings and Calls for Fiscal Responsibility
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, earlier said Nigeria must be cautious not to destroy the fragile stability achieved in recent months. He warned that high deficits and rising debt levels pose a serious threat. Yusuf said he was worried about what he described as the risk of a debt trap, stating that “we need to worry about debt sustainability” because “high levels of deficits and high levels of debt… can choke the fiscal space and lead to a kind of vicious circle of debt.”
He explained that Nigeria has only recently regained some macroeconomic footing and that any disruption could quickly worsen inflation and exchange rate pressures. According to him, “we already have a reasonable level of macroeconomic stability” and “once we lose that recovery… it will create even more problems because that is where the problem of inflationary pressure will come and that is where the pressure on the exchange rate will come.”
Yusuf said the government had claimed that revenue performance was improving and urged it to capitalise on these gains to cut the deficit rather than expand it. He argued that Nigeria must “leverage on the improved revenue situation to moderate the level of deficit and the level of debt exposure so that we don’t put at risk the macroeconomic stability that we have achieved.”
Impact on Development and Governance
Also, the National President of the Nigerian Economic Society, Prof Adeola Adenikinju, earlier questioned the quality of government spending. He said debt was not necessarily bad if it funded productive projects, but Nigeria’s capital releases often come too late to deliver meaningful development outcomes.
Speaking at a national debt dialogue in Abuja, the Executive Director of the Centre for Inclusive Social Development, Mr Folahan Johnson, said the human impact of debt should not be ignored. “The true cost of debts is the out-of-school child, the out-of-school girl,” he said.
BudgIT’s Acting Country Director, Mr Joseph Amenaghawon, said borrowing was not translating into development at the national debt dialogue in Abuja. “The result is debt without development. The cycle where the burden grows but the benefits do not,” he said.
He argued that loans were being used for recurrent spending rather than transformative projects. “Borrowing should build infrastructures at rising rates, systems of high use, climate resilient communities, and a diversified and productive economy,” he said.
He warned that young people were being left behind. “A generation borrowed but not invested in,” he told participants. “For every loan that remains unaccounted for, a potential generation of youth is left behind.”
Amenaghawon said the issue was deeper than debt alone. “What we face today is not simply a debt problem but a structural development crisis. A crisis of priorities, a crisis of governance, a crisis of vision,” he said.
He said borrowing could be useful if properly managed. “Debt is not in itself a sin. Borrowing can and should be a tool for transformation,” he said. “Borrowing can become a boiling point for future generations while the coming benefits remain elusive.”
He urged strict monitoring of projects. “Each loan must be traceable, each project verifiable, each outcome measurable, and accessible to the community,” he said.
Economic Risks and Alternatives
The Chief Executive Officer of CSA Advisory and a development economist, Dr Aliyu Ilias, said the sharp increase in borrowing raises serious macroeconomic concerns, warning that the scale of new debt could worsen inflation and cost of living pressures.
Speaking with The PUNCH in a telephone interview on Sunday, Ilias noted that while borrowing could support growth if properly deployed, the risks currently outweigh the benefits, especially given Nigeria’s rising debt service burden.
“The fact is that it has negative and positive impacts. But the negative impact is that we already have issues of debt service. You look at our budget, about N15tn is needed to service debt, and now we’re incurring more,” he said.
According to him, increased borrowing could inject excess liquidity into the economy, fuelling inflationary pressures if not well managed.
“When you have more money in circulation, it depends on how we manage it. It can bring inflation, and when you have inflation, it will actually increase the cost of living,” he added.
He stressed that the key issue is not borrowing itself but how effectively the funds are utilised.
“What we are borrowing for is the key thing. If it is well managed and invested properly, then it’s not entirely bad,” he said.
On alternatives to borrowing, the economist urged the government to focus on boosting oil output and strengthening trade performance.
However, he described the current borrowing trend as excessive, especially in light of earlier reforms aimed at increasing government revenue.
He also criticised weak budget implementation, particularly in capital expenditure, noting persistent rollovers and delays.
