The Federal Government plans to borrow N17.89tn in 2026 to cover a widening budget deficit as revenue projections fall far below expenditure needs, according to the 2026 budget framework obtained from the Budget Office of the Federation.
Figures in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning show that fresh borrowing will rise from N10.42tn in 2025 to N17.89tn in 2026.
This means an increase of N7.46tn, which experts say deepens concerns about the country’s rising debt obligation.
The framework puts the 2026 fiscal deficit at N20.12tn, up from N14.10tn approved for 2025. Although the deficit is climbing, the deficit to gross domestic product ratio is projected to ease from 4.17 per cent in 2025 to 3.61 per cent in 2026 due to a larger GDP base. It is expected to fall further to 3.24 per cent in 2027 and 1.92 per cent in 2028.
Revenue projections explain the increased dependence on borrowing. The amount available for federal spending, excluding revenue from government-owned enterprises, is expected to decline from N38.02tn in 2025 to N29.35tn in 2026, a drop of N8.67tn.
The government expects revenue to pick up modestly in 2027 and 2028, but analysts say the recovery is too weak to reduce borrowing in the medium term.
Documents show that 80 per cent of the planned loans for 2026 will come from domestic creditors. Out of the N17.89tn, the Federal Government intends to raise N14.31tn locally, while N3.58tn will come from external lenders.
The same pattern continues across 2027 and 2028, with domestic borrowing projected to dominate the government’s debt strategy.
Over the three years from 2026 to 2028, the government plans to borrow N54.91tn in total, with domestic creditors expected to provide N43.92tn of that figure.
Debt service costs are rising sharply. The framework places debt service at N13.94tn for 2025 and N15.52tn for 2026. This means nearly half of the Federal Government’s revenue in 2026 would go into servicing debt. The ratio is projected to increase to 53 per cent in 2027 before falling slightly in 2028.
Despite a slight drop in overall expenditure from N54.99tn in 2025 to N54.46tn in 2026, recurrent items and debt service continue to dominate spending. Recurrent non-debt expenditure is expected to grow, while capital spending is projected to fall from N26.19tn in 2025 to N22.37tn in 2026 due to a rollover policy for unspent 2025 capital funds.
Economists warn that the growing deficit poses serious risks. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the country must act cautiously to protect recent economic stability.
He said, “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.” Yusuf warned that Nigeria had only recently regained macroeconomic balance and that any disruption could heighten inflation and exchange rate pressure.
He urged the government to use improved revenue performance to reduce the deficit. According to him, “we already have a reasonable level of macroeconomic stability and once we lose that recovery, it will create even more problems.”
The National President of the Nigerian Economic Society, Professor Adeola Adenikinju, said the government’s heavy reliance on domestic borrowing would crowd out private sector investments and push up interest rates. He noted that banks would prefer lending to government, leaving businesses with fewer credit options.
At a national debt dialogue in Abuja, experts warned that Nigeria is piling up debts that future generations will bear without seeing the promised development benefits.
The Programme Manager of the Sustainable Nigeria Programme at Heinrich Böll Stiftung, Mr Ikenna Ofoegbu, told participants that the country must confront the real cost of debt. He said, “At the end of the day, all of these debts, our children will have to inherit them.” He added that many Nigerians do not fully grasp the consequences behind the figures that appear in the news.
Ofoegbu also linked debt vulnerabilities to climate disasters that continue to damage infrastructure and worsen economic pressure. “Climate change has a way of destroying infrastructures. And at the end of the day, who pays? The future generation,” he said.
The Executive Director of the Centre for Inclusive Social Development, Mr Folahan Johnson, said the human impact of debt must not be ignored. He said, “The true cost of debts is the out-of-school child and the woman who loses her life because of lack of access to basic maternal health care.”
BudgIT’s Acting Country Director, Mr Joseph Amenaghawon, said borrowing has not translated into real development. He said the country is trapped in “debt without development,” adding that loans are being used for recurrent spending instead of transformative projects.
He said, “Debt is not in itself a sin. Borrowing can and should be a tool for transformation,” but insisted that Nigeria must ensure strict monitoring of projects. According to him, “each loan must be traceable, each project verifiable, each outcome measurable.”
He urged the government to turn borrowing into a bridge for the country’s future rather than a burden on young Nigerians.
