Nigeria faces growing debt risks as 2026 borrowing jumps to N29.2trn

The Federal Government has revised its borrowing plans for 2026 to N29.20 trillion, a sharp increase from the earlier projection of N17.89 trillion, following an expansion of the national budget and widening fiscal deficit, official documents show.

The updated borrowing requirement is reflected in the 2026 Appropriation Bill, recently approved by the National Assembly, and detailed in the House of Representatives’ Order Paper dated March 31, 2026.

The revision comes as the government estimates a fiscal deficit of N31.46 trillion, with total expenditure projected at N68.32 trillion, while revenues are expected to reach N36.87 trillion.

Debt financing will account for the bulk of the deficit, while other sources remain limited, including N189.16 billion from asset sales and privatisation and N2.05 trillion from multilateral and bilateral project-tied loans.

The earlier borrowing plan of N17.89 trillion had been based on a lower deficit of N20.12 trillion, highlighting a significant upward revision in financing needs.

Revenue projections for 2026 indicate N25.92 trillion from federation revenues, N4.31 trillion from independent revenues, and N5.85 trillion from government enterprises. Grants and aid are expected to bring in an additional N1.37 trillion, alongside N300 billion from special funds.

Despite revenue gains, expenditure growth continues to outpace inflows. Debt service alone is projected at N15.81 trillion, including N10.16 trillion in domestic obligations and N5.36 trillion in foreign debt service.

Recurrent non-debt expenditure is set at N15.43 trillion, capital expenditure at N32.29 trillion, and statutory transfers at N4.80 trillion.

READ ALSO; Tinubu requests N9.3trn increase to 2026 budget as debt levels raise alarm

President Bola Ahmed Tinubu had earlier requested the Senate to approve an increase of N9 trillion to the 2026 Appropriation Bill, raising the total budget from N58.4 trillion to N67.4 trillion. To bridge the financing gap, lawmakers have proposed a combination of revenue measures and additional borrowing.

Key revenue-boosting measures include a $10 per barrel increase in the oil benchmark, expected to generate about N2.592 trillion, and stronger contributions from the telecommunications sector following tariff adjustments and policy reforms.

MTN Nigeria is projected to contribute N724 billion in company income tax, while Airtel Nigeria could provide N150 billion, bringing the telecom sector’s total additional revenue to N874 billion.

Despite these measures, external borrowing is set to rise by N6.163 trillion, raising concerns over the sustainability of Nigeria’s debt levels.

“While infrastructure and development projects are necessary, borrowing at this scale poses medium- to long-term risks to fiscal sustainability,” said Bismarck Rewane, renowned economist and Managing Director of Financial Derivatives Company.

 “Relying on debt for more than 40% of the deficit can crowd out private sector investment and increase debt servicing pressures in future budgets.”

Dr. Emeka Okoye, a fiscal policy analyst at the University of Lagos, added: “The revised 2026 borrowing underscores the need for stronger revenue mobilisation and expenditure discipline. Oil price fluctuations and revenue shortfalls could exacerbate the debt burden if not managed prudently.”

Lawmakers have defended the increase, noting that despite higher borrowing, Nigeria’s debt-to-GDP ratio remains within internationally acceptable limits, and the funds will be used primarily to finance critical infrastructure and capital projects aimed at stimulating economic growth.