FEC Approves N58.47 Trillion 2026 Budget Proposal: A Deep Dive into Nigeria’s Fiscal Priorities

Abuja, Dec. 19, 2025 (NAN) – In a pivotal step for Nigeria’s economic planning, the Federal Executive Council (FEC) has approved a N58.47 trillion budget proposal for the 2026 fiscal year. This approval, granted on Friday at the Presidential Villa in Abuja, sets the stage for President Bola Tinubu’s presentation to the National Assembly and outlines the government’s financial roadmap for the coming year.

Mr. Tanimu Yakubu, the Director-General of the Budget Office of the Federation, provided detailed insights into the proposal following the FEC meeting. The figure represents a significant 6% increase over the 2025 budget estimate, signaling continued expansion in government expenditure amidst ongoing economic challenges.

Breaking Down the N58.47 Trillion: Where Will the Money Go?

The budget’s composition reveals critical priorities and pressures. The total aggregates several key components:

• Statutory Transfers: N4.1 trillion allocated to constitutionally mandated funding for bodies like the judiciary and the National Assembly.
• Debt Servicing: A substantial N15.52 trillion, which includes N3.39 trillion for a sinking fund to retire maturing obligations to local contractors and creditors. This underscores the heavy burden of existing debt on the nation’s finances.
• Personnel & Pension Costs: N10.75 trillion (7% higher than 2025), reflecting the wage bill for civil servants and pension commitments.
• Overhead Costs: N2.22 trillion for day-to-day government operations.
• Government-Owned Enterprises & Donor Projects: N4.98 trillion for enterprises and N1.37 trillion for grants and donor-funded projects are included in the aggregate expenditure.

Contextualizing the Numbers: The Revised Fiscal Framework

The approval came alongside a crucial amendment to the 2026–2028 Medium-Term Expenditure Framework (MTEF). As explained by the Minister of Budget and Economic Planning, Senator Abubakar Bagudu, a key assumption was revised: the official exchange rate was moved from N1,512 to N1,400 to the US dollar. This more optimistic rate directly reduced the projected budget size from the earlier MTEF figure of N54.46 trillion to the approved N58.47 trillion, illustrating how sensitive the budget is to macroeconomic assumptions.

Strategic Shifts and Underlying Realities

Mr. Yakubu’s briefing highlighted several structural trends with long-term implications:

1. Moving Away from Oil: A landmark shift is now confirmed: non-oil revenues (from corporate tax, VAT, customs, and independent revenues) constitute roughly two-thirds of total government receipts. This marks a significant, though challenging, structural move away from oil dependence.
2. The Drivers of Spending Growth: The budget increase is not primarily for new, discretionary projects. It is largely driven by mandatory expenditures—debt service, wages, and pensions. This leaves less fiscal space for capital investments.
3. Conservative and Realistic Assumptions: The government describes its oil price, exchange rate, and revenue projections as “conservative and realistic,” aiming to avoid the pitfalls of over-optimistic budgeting that leads to massive deficits.
4. Focus on Completion Over New Projects: Capital spending has been marginally reduced to prioritize completing ongoing projects and ensuring “value for money,” a nod to concerns about abandoned projects and inefficient spending.

The Deficit and Financing: A Balancing Act

The budget reflects a larger deficit, which Mr. Yakubu clarified is a result of these mandatory spending pressures “rather than policy loosening.” To finance this gap, the government will rely on domestic borrowing, complemented by concessional multilateral loans. This strategy aims to manage cost but will add to the nation’s debt stock.

The Minister of Information and National Orientation, Alhaji Mohammed Idris, characterized the session as a “one-item FEC meeting,” underscoring the singular importance of the budget approval. With the FEC’s endorsement secured, the 2026 Appropriation Bill is now poised for legislative scrutiny, where debates over national priorities, resource allocation, and the economic assumptions behind the N58.47 trillion figure will take center stage.

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