The Federal Government plans to borrow ₦17.89 trillion in 2026 to fund a widening budget deficit as revenue projections fall sharply below expenditure needs, according to the 2026 budget framework obtained from the Budget Office of the Federation.
Official figures in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning show that total new borrowing will jump from ₦10.42 trillion in 2025 to ₦17.89 trillion in 2026. This is an increase of ₦7.46 trillion (72 per cent) in fresh loans over one year, amid concerns over rising debt costs.
The borrowing requirement is driven by a larger fiscal deficit and a weaker revenue outlook, even though overall expenditure is projected to fall slightly compared with the current year. The framework puts the 2026 fiscal deficit at ₦20.12 trillion, up from ₦14.10 trillion approved for 2025.
This represents an increase of ₦6.02 trillion, or about 43 per cent year-on-year. Despite this jump in the nominal deficit, the deficit to gross domestic product ratio is projected to decline from 4.17 per cent in 2025 to 3.61 per cent in 2026, reflecting a higher projected GDP base. The deficit ratio is expected to ease further to 3.24 per cent in 2027 and 1.92 per cent in 2028.
Revenue figures explain why the government is resorting to much larger borrowing. The amount available for the federal budget, excluding the retained revenue of government-owned enterprises, is projected to fall from ₦38.02 trillion in 2025 to ₦29.35 trillion in 2026.
This is a drop of ₦8.67 trillion or about 23 per cent between the two years. The government expects revenue to recover modestly to ₦31.53 trillion in 2027 and ₦34.90 trillion in 2028.
That implies growth of about seven per cent between 2026 and 2027 and about 11 per cent between 2027 and 2028, but the recovery is not strong enough to remove the need for heavy borrowing in the medium term.
The bulk of the 2026 borrowing will come from domestic creditors. The document shows that of the planned ₦17.89 trillion new loans for 2026, ₦14.31 trillion will be raised from the domestic market, while ₦3.58 trillion will be sourced from external creditors. Domestic borrowing, therefore, accounts for 80 per cent of new loans in 2026, while foreign borrowing contributes 20 per cent.
This strong tilt towards the local market is not new. In 2025, domestic borrowing is put at ₦8.58 trillion out of total new loans of ₦10.42 trillion, which is about 82 per cent of the borrowing requirement. External borrowing of ₦1.84 trillion makes up the remaining 18 per cent.
The same pattern is projected to continue after 2026. In 2027, the Federal Government plans to borrow ₦21.18 trillion, comprising ₦16.94 trillion in domestic debt and ₦4.24 trillion in external loans.
Domestic borrowing thus remains at 80 per cent of the total, with foreign loans at 20 per cent. In 2028, planned borrowing drops to ₦15.84 trillion, but the structure remains almost unchanged, with ₦12.67 trillion expected from domestic creditors and ₦3.17 trillion from external lenders, again roughly 80 and 20 per cent respectively.
When the numbers for the three budget years are added together, the scale of reliance on debt becomes clearer. Between 2026 and 2028, the Federal Government plans to borrow ₦54.91 trillion in total. Domestic creditors are expected to provide ₦43.92 trillion of this amount, while external creditors will supply ₦10.98 trillion.
Debt service costs are also rising. According to the framework, debt service is projected at ₦13.94 trillion for 2025 and ₦15.52 trillion for 2026, an increase of ₦1.58 trillion, or about 11 per cent year-on-year.
Recurrent non-debt expenditure is projected to rise from ₦13.59 trillion in 2025 to ₦15.27 trillion in 2026. Within this, personnel costs for ministries and departments will take ₦8.36 trillion, while pensions, gratuities, and retirees’ benefits will cost ₦1.38 trillion. Other service-wide votes, including key national programmes, will rise from ₦1.06 trillion in 2025 to ₦1.85 trillion in 2026.
Capital expenditure is set to fall from ₦26.19 trillion in 2025 to ₦22.37 trillion in 2026. The reduction is linked to a policy decision that ministries and agencies will roll over 70 per cent of their 2025 capital allocations into 2026 rather than seek fresh approvals for the same projects.
Capital spending is projected to recover slightly to ₦23.28 trillion in 2027 and then ease to ₦21.26 trillion in 2028. Even with this sizeable capital envelope, the combination of recurrent spending and debt service still dominates the budget and squeezes the room for new infrastructure.
Other financing items are relatively small when compared with the borrowing figures. Privatisation proceeds are projected at ₦312.33 billion in 2025 and are expected to fall to ₦189.16 billion in 2026. They are then forecast to rise modestly to ₦197.23 billion in 2027 and jump to ₦486.54 billion in 2028.
Even at that peak level, privatisation receipts would still amount to less than three per cent of total financing. Project-tied loans from multilateral and bilateral partners are also expected to decline from ₦3.36 trillion in 2025 to ₦2.05 trillion in 2026, then to ₦1.17 trillion in 2027, and ₦556.66 billion in 2028.
The PUNCH
