By Salisu Sani-Idris
In a pivotal step shaping Nigeria’s economic trajectory, the Federal Executive Council (FEC) has approved a proposed budget of N58.47 trillion for the 2026 fiscal year. The announcement, made by Budget Office Director-General Mr. Tanimu Yakubu following a Council meeting at the Presidential Villa in Abuja, marks the formal commencement of the annual budget cycle and offers a critical window into the government’s financial priorities for the medium term.
This proposal is not developed in isolation; it is framed within the 2026–2028 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The MTEF is a crucial planning tool that projects government revenues and expenditures over a three-year period, aiming to impose fiscal discipline and ensure budget realism. Within this framework, the total projected budget size was initially N54.46 trillion, with retained revenue estimated at N34.33 trillion. The approved figure of N58.47 trillion represents a 6% increase over the 2025 budget estimate, a growth driven by specific, high-priority expenditures.
Deconstructing the N58.47 Trillion: Where Will the Money Go?
The budget breakdown reveals the intense pressures on the nation’s finances. Key allocations include:
- Debt Servicing (N15.52 trillion): This colossal figure, which includes a N3.39 trillion sinking fund for retiring local debt, underscores the significant fiscal constraint imposed by existing obligations. It highlights how debt repayment is consuming a large portion of revenue, limiting funds available for new capital projects.
- Personnel & Pension Costs (N10.75 trillion): A 7% increase from 2025, this covers public sector wages and pensions, reflecting agreements like the new minimum wage. It’s a mandatory, recurrent expenditure that is difficult to reduce.
- Statutory Transfers (N4.1 trillion): These are constitutionally mandated allocations to bodies like the National Assembly, Judiciary, and Universal Basic Education Commission (UBEC).
- Government-Owned Enterprises (GOEs) & Donor Projects (N6.35 trillion): This combines N4.98 trillion for GOEs and N1.37 trillion for grants and donor-funded projects, indicating a substantial off-budget spending stream.
- Overhead Costs (N2.22 trillion): The day-to-day operational expenses of running government ministries and agencies.
Key Fiscal Insights and Strategic Shifts
Director-General Yakubu’s briefing provided several critical takeaways about Nigeria’s evolving fiscal landscape:
- The Non-Oil Revenue Transition is Accelerating: A landmark shift is confirmed: non-oil revenues (like Corporate Tax, VAT, and Customs duties) now constitute roughly two-thirds of total government receipts. This is a structural move away from oil dependence, though oil revenue volatility still significantly impacts overall fiscal health.
- “Conservative and Realistic” Assumptions: The government has revised key budget assumptions downward, notably the official exchange rate from N1,512/$1 to N1,400/$1. This suggests a more cautious, perhaps optimistic, view of near-term naira stability. Oil price projections were also described as conservative, aiming to avoid the pitfalls of over-optimistic revenue forecasts.
- Capital Spending Takes a Back Seat: In a telling detail, capital expenditure is being marginally reduced to prioritize completing ongoing projects and ensuring value for money. This indicates that the budget’s growth is not for new, expansive investments but is instead being driven by mandatory recurrent costs—primarily debt, wages, and pensions.
- Deficit Financing Strategy: The larger budget deficit will be financed primarily through domestic borrowing, supplemented by concessional loans from multilateral institutions like the World Bank and IMF. This approach aims to manage cost but continues to add to the nation’s debt stock.
The Path Forward: From FEC Approval to National Assembly
As confirmed by the Minister of Budget and Economic Planning, Senator Abubakar Bagudu, and the Minister of Information, Alhaji Mohammed Idris, this FEC approval is the first major administrative step. The proposal will now be presented by President Bola Tinubu to a joint session of the National Assembly. This kicks off the legislative appropriation process, where lawmakers will scrutinize, debate, and potentially modify the budget—a process that will test the government’s ability to secure timely passage for its fiscal plan.
In essence, the 2026 budget proposal paints a picture of a government navigating a tight fiscal space. It is balancing unavoidable recurrent commitments against the urgent need for capital development, all while attempting to institutionalize a more sustainable, non-oil-dependent revenue base. The coming legislative debates will determine the final shape of this crucial financial blueprint for the nation.
Edited by Rotimi Ijikanmi. Source: NAN (www.nannews.ng)
