Can Nigeria’s record 2026 budget deliver as the second half of the year begins?
Festus Akanbi examines BudgIT’s analysis and the tough questions it raises
When President Bola Ahmed Tinubu signed the N68.32 trillion Appropriation Act for 2026 into law, Nigeria crossed another fiscal milestone. Never before has the country approved a budget of such magnitude. The record spending plan reflects the government’s determination to sustain economic reforms, expand infrastructure, strengthen security, and stimulate growth. Yet beneath its impressive size lies a more fundamental question: can Nigeria realistically finance its most ambitious budget ever?
That question has increasingly occupied economists, development experts, and fiscal transparency advocates. Among the most vocal is BudgIT, the civic technology organisation renowned for scrutinising public finances. Its assessment raises concerns not about the desirability of higher public investment but about the credibility of the assumptions underpinning the fiscal framework. According to the organisation, the budget exposes a widening disconnect between government ambition and fiscal reality.
The figures illustrate the challenge. While total expenditure is projected at ₦ 68.32 trillion, expected revenue is N36.87 trillion, leaving a financing gap of N31.45 trillion. In effect, projected revenues can finance only 53.9 per cent of planned expenditure, meaning almost one out of every two naira government intends to spend must come from borrowing and other deficit-financing sources. The projected fiscal deficit amounts to about 6.4 per cent of Gross Domestic Product, more than double the 3 per cent ceiling prescribed by the Fiscal Responsibility Act.
Fiscal deficits are not unusual, particularly in developing economies pursuing growth-enhancing investments. What distinguishes Nigeria’s position is that the imbalance has become increasingly structural rather than cyclical. Successive budgets have relied on optimistic revenue projections that ultimately fall short, forcing government either to borrow more than anticipated or delay capital projects.
Historical performance reinforces these concerns. Government revenue has consistently underperformed budget estimates over the past decade. Even in 2025, collections during the first half of the year lagged behind projections, raising fresh questions about the realism of official forecasts. Against that backdrop, BudgIT argues that the projected N36.87 trillion revenue target for 2026 deserves closer scrutiny, particularly as much of it depends on stronger oil receipts and improved non-oil tax collection.
Oil remains the largest source of uncertainty. The budget assumes production of 1.84 million barrels per day at a benchmark price of $64.85 per barrel. While the price assumption appears conservative, sustaining production at that level remains difficult given recurring pipeline vandalism, crude theft and operational constraints. Even modest shortfalls in production or international prices could create significant revenue gaps.
The government expects the recently introduced tax reforms to strengthen non-oil revenue and reduce dependence on crude exports. The reforms seek to improve compliance, modernize tax administration, and broaden the tax base through digitalization. Yet analysts caution that institutional reforms rarely produce immediate gains. Administrative readiness, taxpayer confidence, enforcement capacity and easier compliance will ultimately determine whether projected revenues materialise.
The growing debt burden further complicates the outlook. Debt servicing alone is projected at N15.81 trillion, consuming almost 43 percent of expected revenue before the government spends a naira on salaries, infrastructure, education, or healthcare. By the end of 2025, Nigeria’s total public debt had risen to about N159.28 trillion, reflecting years of persistent fiscal deficits. Earlier this year, the President also sought legislative approval for an additional $6 billion in external borrowing to support implementation of the 2026 budget.
For many economists, these figures do not necessarily imply that borrowing is unsustainable. Rather, they highlight the need to ensure that debt finances productive investments that can expand the economy and generate future revenues. Where borrowed funds are efficiently invested in infrastructure, energy, transport and human capital, they can strengthen long-term fiscal sustainability. Where implementation falls short, however, debt accumulates faster than the economy’s capacity to service it.
If revenue assumptions dominate one side of the debate, expenditure priorities define the other. The 2026 budget allocates N32.28 trillion, or 47.1 per cent of total spending, to capital expenditure, the highest proportion in recent years. The allocation signals government’s commitment to infrastructure-led growth through investments in roads, power, agriculture and healthcare. Recurrent non-debt expenditure stands at N15.4 trillion, while statutory transfers amount to N4.79 trillion.
The emphasis on capital spending marks a notable departure from earlier budgets, where recurrent expenditure dominated allocations. Between 2023 and 2026, capital expenditure increased from about 27 per cent to more than 47 per cent of total spending. Yet allocations alone do not guarantee development outcomes. Nigeria’s long-standing challenge has been translating appropriations into completed projects.
BudgIT argues that budget performance should be measured not by appropriations but by releases and implementation. Historically, capital projects have suffered delayed releases, procurement bottlenecks, and incomplete execution. The organisation therefore advocates stronger legislative oversight, greater transparency in the release of funds, and more rigorous monitoring of project implementation to ensure value for money.
Concerns also persist over sectoral priorities. Education, healthcare, science and technology, and women’s development continue to receive allocations that fall below internationally recognized benchmarks. At a time of rising poverty, youth unemployment and widening human capital deficits, many analysts argue that greater investment in education and health may ultimately generate stronger long-term economic returns than physical infrastructure alone.
The government’s revenue diversification strategy relies heavily on newly enacted tax reforms intended to improve compliance and broaden the tax base without increasing the Value Added Tax rate. If effectively implemented, the reforms could gradually improve Nigeria’s tax-to-GDP ratio, which remains among the lowest in Africa. However, legislation alone cannot transform revenue performance.
The broader economic environment further complicates the outlook. Although recent reforms have improved foreign exchange liquidity and strengthened investor confidence, inflation continues to erode household purchasing power while poverty remains widespread. According to development estimates cited by BudgIT, more than six in every 10 Nigerians now live below the poverty line, increasing pressure on the government to ensure that fiscal policy delivers tangible improvements in living standards.
The fiscal challenge therefore extends beyond balancing revenue and expenditure. It is fundamentally about credibility. Investors need confidence that revenue targets are achievable. Development partners want assurance that borrowed funds will finance productive investments. Citizens expect visible improvements in infrastructure, education, healthcare, security and employment that justify continued fiscal expansion.
For this reason, BudgIT has urged the National Assembly to subject future budgets to more rigorous scrutiny through mandatory revenue assessments, sensitivity analyses of oil price and production assumptions, regular mid-year budget reviews and stronger oversight of implementing agencies. Such measures, it argues, would strengthen fiscal discipline and reduce the risk of widening deficits.
Ultimately, the 2026 budget is both an expression of ambition and a test of execution. Its unprecedented size reflects the government’s determination to accelerate economic reforms and development. Yet its success will depend not on its record-breaking value but on whether projected revenues materialise, borrowed funds are prudently managed and approved projects are fully implemented. Nigeria has demonstrated before that large budgets do not automatically translate into improved public services or stronger economic outcomes. The true measure of the 2026 Appropriation Act will therefore lie in government’s ability to convert fiscal ambition into measurable improvements in infrastructure, human capital and economic opportunity.