Nigeria may resort to additional borrowing as projections indicate that the proposed 2026 federal budget could face a deficit of about N25 trillion. Economic analysts say the widening gap between government revenue and expenditure is driven by rising debt servicing costs fuel subsidy related obligations and increased spending on infrastructure and social programmes.
Budget experts warn that unless revenue generation improves significantly, the government may have limited options beyond domestic and external loans. They note that while borrowing can fund critical projects, excessive debt accumulation raises concerns about long term fiscal sustainability.
The Minister of Finance recently acknowledged the revenue challenge, pointing to low tax compliance oil production constraints and global economic uncertainties as major factors affecting government earnings. Efforts are reportedly underway to expand the tax base improve collection efficiency and reduce leakages in public finance management.
Public finance advocates argue that beyond borrowing, there is a need for stronger cost control and prioritization of spending. They say non essential expenditures should be trimmed while capital projects with clear economic returns receive priority funding.
Nigeria debt profile has grown steadily in recent years, with debt servicing consuming a significant portion of annual revenue. Economists caution that high debt service to revenue ratios limit the government ability to invest in education healthcare and other social sectors.
Business groups have called for reforms that stimulate private sector growth, expand exports and attract foreign investment. They believe a stronger economy would generate more tax revenue and reduce reliance on borrowing.
As preparations for the 2026 budget continue, lawmakers are expected to scrutinize borrowing plans and push for measures that balance development needs with fiscal responsibility. Observers say the coming months will be critical in shaping Nigeria economic direction and debt strategy.
