Nigeria will keep borrowing to fund ₦25.9trn budget deficit — Senate

The Senate has said Nigeria will continue to rely on borrowing to finance its growing budget deficit, despite public concerns over the country’s rising debt profile.

It also warned that the era of rolling over unimplemented budgets and extending implementation timelines is over, pledging stricter scrutiny of Ministries, Departments and Agencies (MDAs) and tighter fiscal discipline in executing the 2026 Appropriation Act.

Speaking at a public hearing on the 2026 Appropriation Bill organised by the Senate Committee on Appropriations, the committee’s chairman, Senator Olamilekan Adeola (APC, Ogun West), said borrowing has become unavoidable due to limited and unpredictable revenues alongside mounting development needs.

“Never again will the National Assembly approve budget extensions. We must discipline our budgeting cycle, enforce strict adherence to timelines and ensure better coordination between policy design and implementation,” Adeola said.

He argued that the problem is not borrowing itself, but how deficits are financed, stressing that Nigeria must meet its financial obligations to protect its credit rating and international reputation.

According to him, the government is reducing domestic borrowing to avoid crowding out private sector credit and is instead exploring alternatives such as external loans, asset optimisation, privatisation, Public-Private Partnerships, joint ventures and Eurobond issuances.

The proposed 2026 budget stands at ₦58.47 trillion, with projected revenue of ₦33.19 trillion, leaving a deficit of about ₦25.27 trillion to be funded largely through borrowing.

Adeola said debt servicing is estimated at ₦15.90 trillion, while ₦23.21 trillion has been earmarked for capital expenditure to boost infrastructure and productivity. He described the spending plan as a “Budget of Consolidation,” built around subsidy removal, tax reforms, public finance restructuring and electricity sector improvements.

He cautioned heads of MDAs to properly defend their budget proposals or risk having funds reallocated, adding that all public funds, including service-wide votes, would remain under legislative oversight.

Meanwhile, economist and fiscal policy expert, Dr Olatilewa Adebanjo, warned that Nigeria’s widening deficit could become unsustainable without stronger revenue mobilisation and stricter enforcement of fiscal rules.

He called for a comprehensive review of the Fiscal Responsibility Act, saying the law remains underutilised, and urged closer monitoring of revenue-generating sectors to curb leakages.

Adebanjo also raised concerns about alleged losses in the mining and solid minerals sector, accusing some foreign firms of extracting resources with little benefit to Nigeria. He further criticised unrealistic revenue projections and called for greater accountability among government agencies.

The Accountant-General of the Federation, Shamseldeen Ogunjimi, also faulted the country’s budgeting system, noting that while Nigeria performs well in drafting budgets, it often struggles with implementation.

He emphasised that the budget must go beyond figures on paper and translate into tangible results for citizens.