FG, states save N3.56tn despite rising borrowing

By Diden Abigail Owuntarose

The Federal Government and other tiers of government saved a combined ₦3.56tn from Federation Account revenue between January and September 2026, despite the Federal Government’s increasing reliance on borrowing to finance its budget deficit.

The figure represents a 95 per cent increase from the ₦1.83tn recorded during the corresponding period of 2025, according to a report by Agora Policy titled Ten Insights from FAAC Disbursements for January–September 2026.

The report showed that savings and interventions accounted for ₦8.34tn of deductions from Federation Account revenue during the nine-month period.

Interventions accounted for the largest share at ₦4.78tn, while savings stood at ₦3.56tn. Refunds amounted to ₦1.21tn, collection costs were ₦1.09tn, and transfers accounted for ₦469.06bn.

Together, savings and interventions represented 75.1 per cent of total deductions, compared with 39.9 per cent in the corresponding period of 2025.

The increase in savings comes amid the Federal Government’s expanded borrowing plans for 2026. The government reportedly raised its borrowing target by ₦11.31tn to ₦29.20tn from an earlier projection of ₦17.89tn.

The 2026 budget provides for total expenditure of ₦68.32tn against projected revenue of ₦36.87tn, leaving a deficit of ₦31.46tn to be financed largely through borrowing.

Despite the borrowing pressure, gross Federation Account revenue increased by 12.6 per cent to ₦31.46tn during the period, from ₦27.95tn recorded in the first nine months of 2025.

Total deductions, however, declined by 3.5 per cent to ₦11.10tn from ₦11.50tn, while distributable revenue before augmentation rose by 23.8 per cent to ₦20.36tn.

The report also revealed a significant shift in deductions, with refunds falling by 77 per cent from ₦5.20tn to ₦1.21tn, while savings and interventions increased substantially.

The figures have raised questions about the relationship between government savings and continued borrowing to finance public expenditure, particularly amid rising debt-servicing obligations.

However, the ₦3.56tn savings should not be interpreted as funds retained exclusively by the Federal Government, as Federation Account revenue is shared among federal, state and local governments under existing allocation arrangements.

The development highlights the need for improved revenue generation, transparent fiscal management and effective allocation of public resources to support economic growth while reducing dependence on borrowing.