By Anthony Otaru, Abuja
Nigeria’s ₦58.18 trillion 2026 federal budget is facing deepening uncertainty as leading economists warn that a toxic mix of weak government inflows, rising debt obligations, and entrenched fiscal indiscipline may once again hollow out capital spending, turning the budget into what critics increasingly describe as a “debt-servicing document.”
The warning, coming from respected voices including political economist Pat Utomi, former Debt Management Office chief Abraham Nwankwo, and capital market scholar Uche Uwaleke, reinforces growing fears that Nigeria’s budgets are expanding in size but shrinking in real developmental impact.
President Bola Tinubu presented the ₦58.18 trillion Appropriation Bill to the National Assembly in December 2025, proposing revenues of ₦34.33 trillion and a deficit of ₦23.85 trillion, to be financed mainly through fresh borrowing. The budget allocates ₦26.08 trillion to capital expenditure, ₦15.25 trillion to recurrent (non-debt) spending and ₦15.52 trillion to debt servicing.
As of January 30, 2026, the bill has passed second reading in both chambers but has not been enacted, forcing the Federal Government to continue operating under the 2025 Appropriation Act.
Beyond legislative delays, analysts say the deeper problem is Nigeria’s fragile fiscal structure.
Official figures from the Budget Office and the Office of the Accountant-General show that in 2025, the Federal Government realised only about ₦9.8 trillion in revenues against projections of over ₦15 trillion.
In the same period, debt servicing rose to about ₦8.2 trillion, indicating that more than 80 per cent of actual inflows went toward paying existing debts.
Nwankwo described the situation as “dangerously unsustainable.”
“When a country spends over 60 to 70 per cent of its revenues servicing debt, it is no longer budgeting for development; it is budgeting for survival,” he said.
“The 2026 budget risks becoming another paper document if revenue reforms are not aggressively pursued.”
Nigeria’s total public debt now stands at about ₦97 trillion. While the debt-to-GDP ratio of roughly 40 per cent remains within global benchmarks, experts insist that the real danger lies in the revenue-to-debt service ratio, which is among the worst among emerging economies.
The International Monetary Fund has repeatedly warned that Nigeria is approaching debt distress, not because of the size of its debt stock, but because of its weak and volatile income base.
Despite years of diversification rhetoric, oil still accounts for about 45 per cent of government income. In 2025, actual production averaged 1.4 to 1.5 million barrels per day, far below budget targets, resulting in billions of dollars in lost earnings.
Non-oil inflows have improved marginally through VAT and company income tax, but remain constrained by a massive informal economy estimated at over 50 per cent of GDP.
Uwaleke said Nigeria’s fiscal crisis is driven more by governance failures than economic fundamentals.
“Nigeria’s tax-to-GDP ratio is still around 10 per cent, one of the lowest in Africa. South Africa is above 25 per cent, Kenya is above 18 per cent,” he said. “Without a serious broadening of the tax base, no budget will ever work, whether it is ₦20 trillion or ₦60 trillion.”
Utomi, however, argued that Nigeria’s budget problems are rooted in political behaviour.
“Borrowing is a function of spending. If any serious-minded leader is realistic, the National Assembly alone should not take more than 10 per cent of the total budget,” he said. “But the political class will not. They are too selfish, too self-centred, and already planning what to use for the next elections. That is what has triggered this crisis.”
According to him, contractors are not being paid partly because funds are being hoarded for political purposes.
“They want to keep money for elections. They are borrowing and consolidating funds to buy votes. That is how political ambition is degrading the economy,” Utomi said.
He described Nigeria’s budgeting culture as fundamentally undisciplined.
“Budgeting is about discipline. If you are not disciplined, you won’t achieve the coordination required to sustain that spending that drives growth. Unfortunately, indiscipline has defined Nigeria’s budgetary history. We spend without discipline.”
He added that the lack of transparency and government propaganda is eroding investor confidence.
“The truth is not there. There is no transparency. Government is missing the fundamentals of budgeting and focusing on image management instead.”
Meanwhile, recurrent expenditure continues to dominate Nigeria’s fiscal profile. In the 2025 budget, recurrent spending stood at about ₦13.7 trillion, representing over 55 per cent of total expenditure, driven by salaries, pensions, overheads and security costs. The wage bill alone crossed ₦5 trillion following the new minimum wage and expanded recruitment in security agencies.
A senior official in the Budget Office admitted that controlling recurrent costs has become politically difficult.
“Every reform hits someone’s interest – workers, politicians, agencies. But without trimming the size of government, capital spending will keep shrinking,” the official said.
The implications for infrastructure are already visible. Major projects such as the Lagos–Ibadan Expressway, Abuja–Kaduna–Kano highway, access roads to the Second Niger Bridge and the Mambilla Hydropower Project have suffered persistent funding delays.
The Ministry of Works estimates that Nigeria currently has over 12,000 ongoing federal road projects, with completion costs exceeding ₦15 trillion.
Infrastructure finance expert Funke Adeola warned that inconsistent funding is driving up costs.
“Every year of delay adds between 15 and 25 per cent to project costs. Nigeria is paying more for less because of poor fiscal discipline,” she said.
With the 2026 budget yet to be passed, the Federal Government is still operating under the 2025 Appropriation Act, with about 70 per cent of last year’s capital budget being rolled over due to low releases.
President Tinubu has promised to clear outstanding capital liabilities by March 31, 2026, after which Nigeria should return to a single budget cycle.
But experts remain sceptical.
Former Finance Minister Ngozi Okonjo-Iweala summed up the dilemma.
“Nigeria does not have a spending problem; it has a revenue problem. Until leaders confront this honestly, every budget will look impressive on paper and disappointing in reality,” she said.
For Utomi, however, the issue is even deeper.
“Without discipline, transparency and political restraint, no amount of revenue reform will fix Nigeria’s budget. What we are seeing is not just an economic failure; it is a governance failure.”
As the National Assembly moves toward final passage, the emerging consensus among Utomi, Nwankwo and Uwaleke is stark: unless Nigeria urgently boosts inflows, curbs recurrent spending and restores fiscal discipline, the 2026 budget risks becoming yet another cycle of rising debt, stalled projects and postponed development.
