FG Seeks N17.89tn Loans For 2026 Budget
By Akeem Oduyoye
The Federal Government is preparing to borrow N17.89tn in 2026, a sharp rise from the previous year, as it confronts a widening fiscal deficit and a revenue outlook that continues to lag behind expenditure needs. The new figures, contained in the 2026 budget framework, show a 72% jump in additional borrowing compared to 2025.
According to the document, the projected deficit for 2026 is N20.12tn, significantly higher than the current fiscal year, even though total spending is expected to drop slightly. Government officials say the debt surge is driven by structural revenue gaps and persistent obligations that must be met despite tighter fiscal space.
A breakdown of the borrowing plan shows that N14.31tn will be sourced locally, while N3.58tn will come from external lenders, maintaining the Federal Government’s recent pattern of relying heavily on the domestic market. Projections for 2027 and 2028 follow a similar structure, leaving the country with an estimated N54.91tn in new loans over the three-year period.
Officials warn that debt servicing will take a larger share of government income. Estimates for 2026 put debt service at N15.52tn, pushing the debt-service-to-revenue ratio close to half of all government earnings. By 2027, the ratio is expected to rise further before easing slightly the following year.
Capital spending is also set to shrink as the government reduces fresh project allocations and instructs ministries to roll over most of their existing capital budgets. While recurrent spending is projected to grow, the administration says the adjustments are temporary measures to stabilise finances and streamline ongoing programmes.
Experts speaking on the country’s fiscal direction expressed deep concern about the rising dependence on borrowing and its effect on economic stability. One economist cautioned that “high levels of deficits and high levels of debt can choke the fiscal space and lead to a kind of vicious circle of debt,” warning that any slip in economic stability could worsen inflation and exchange-rate pressures.
Another analyst warned that excessive domestic borrowing could crowd out private businesses. He noted that “if you borrow from the public… interest rates will go up,” arguing that banks may increasingly prefer lending to government instead of funding productive enterprises.
Civic actors also stressed the long-term consequences of accumulating liabilities without visible development impact. One participant cautioned that today’s decisions will define the realities of younger Nigerians, saying, “At the end of the day, all of these debts, our children will have to inherit them.”
Speakers at the fiscal dialogue further criticised opacity in public spending, insisting that every loan must be tied to measurable outcomes. One commentator described the current situation as “debt without development,” arguing that borrowing has fed recurrent items instead of transformative infrastructure.
They urged the government to strengthen transparency, track project performance, and ensure that borrowing becomes a tool for growth rather than a burden. As one expert concluded, “Each loan must be traceable, each project verifiable, each outcome measurable.”