In a significant policy move that sets the tone for Nigeria’s economic direction in the coming year, the federal cabinet has approved a medium-term fiscal plan that outlines key parameters for the 2026 national budget framework. This strategic blueprint, unveiled by the Minister of Budget and Economic Planning, Atiku Bagudu, offers a comprehensive outlook on projected government spending, revenue expectations, macroeconomic assumptions, and the fiscal challenges facing Africa’s largest economy. Investing.com+1
Projected Government Spending and Revenue
The approved fiscal plan estimates total federal government spending at approximately ₦54.5 trillion (about $37.7 billion) in 2026 — signalling a bold step toward addressing priority sectors, while navigating ongoing fiscal pressures. Of this projected expenditure, the government forecasts total revenue of ₦34.33 trillion, leaving a substantial budget deficit of ₦20.1 trillion, equivalent to 3.61% of Nigeria’s gross domestic product (GDP). Investing.com
Debt servicing — the cost of financing the nation’s existing obligations — accounts for a significant portion of projected outlays, estimated at ₦15.9 trillion, highlighting the growing fiscal strain faced by the country. Meanwhile, non-recurrent debt obligations — spending outside of typical operational needs — are put at ₦15.27 trillion, further underscoring the financial challenges at hand. Investing.com
Economic Assumptions Underpinning the Budget
Central to the fiscal plan’s forecasts are the macroeconomic assumptions underpinning revenue and growth projections. Among these assumptions:
- Oil price benchmark: $64.85 per barrel — a key determinant given Nigeria’s heavy reliance on oil revenue.
- Oil production: Expected to average 1.84 million barrels per day (bpd), which is below the government’s 2.06 million bpd target.
- Exchange rate: Set at ₦1,512 per US dollar.
- GDP growth: Projected at 4.68% for 2026 — reflecting cautious optimism about economic expansion. Investing.com
Given that oil remains Nigeria’s primary foreign exchange earner, the decision to use conservative production estimates signals a realistic approach to fiscal planning, accounting for persistent challenges in the energy sector. Investing.com
Revenue Sharing and Fiscal Deficit Dynamics
Recent reports also break down revenue expectations across all tiers of government — with the federal government expected to receive about ₦22.6 trillion, states approximately ₦16.3 trillion, and local governments around ₦11.85 trillion. This revenue sharing framework highlights a more detailed approach to distributing financial resources nationwide. The Nation Newspaper
Despite these allocations, total revenue estimates represent a notable 16% decline in federal earnings compared to the 2025 budget estimate — reflecting pressure on Nigeria’s revenue base amid slower global oil markets and domestic economic challenges. This decline underscores the need for reform in revenue mobilization, particularly outside of oil. Business Post Nigeria
Policy Priorities and Government Objectives
Officials have stated that the fiscal strategy emphasizes economic diversification, fiscal discipline, and continued investment in critical sectors such as infrastructure, security, and human capital development. The approved 2026–2028 Medium-Term Expenditure Framework (MTEF) is designed to support long-term planning and ensure that annual budget expenditures align with broader national development goals. ThisDay Live
At the Federal Executive Council (FEC) meeting where the fiscal plan was approved, senior government officials reiterated the importance of coordinating fiscal and monetary policy to manage inflation, support growth, and stabilize the economy ahead of Nigeria’s 2027 general elections. ThisDay Live
Challenges Ahead
Despite the optimistic growth forecast, Nigeria’s medium-term economic outlook is tempered by several structural challenges:
- Underperformance in oil production relative to targets continues to weaken foreign exchange earnings.
- High debt servicing costs threaten to crowd out capital investment in essential public services.
- Revenue shortfalls demand sustained reforms in taxation, customs administration, and non-oil sector development. Investing.com+1
Economists argue that Nigeria’s continued reliance on oil exposes the economy to external shocks and global price volatility. There is growing consensus among policymakers that boosting non-oil revenue streams — through expanded manufacturing, digital services, and agriculture — is critical for long-term fiscal sustainability. Business Post Nigeria
What This Means for Nigerians
For ordinary Nigerians, the approved fiscal plan lays the groundwork for the 2026 national budget and signals government intent to confront continuing economic challenges head-on. However, the projected deficit and revenue decline point to tough choices ahead, particularly around budget priorities, social spending, and economic reforms.
As the budget framework advances to the National Assembly for review and approval, Nigerians will be watching closely to see how funding decisions are shaped and what policy measures are adopted to support growth, job creation, and improved living standards in the years ahead.