December 17, 2025/CSL Update
This Day report indicates that Nigeria’s proposed 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) have come under renewed scrutiny following official confirmation of a significant revenue shortfall in 2024–2025. Speaking at a Senate Committee on Finance session in Abuja, Finance Minister Wale Edun acknowledged the shortfall, noting that it has forced the large-scale rollover of capital expenditure into future fiscal years.
For investors, the development underscores persistent fiscal credibility concerns, rising domestic borrowing, execution slippages, and elevated debt-service pressures, despite ongoing reform efforts. To bridge funding gaps, the government has relied heavily on borrowing, prompting senators to question how these funds were deployed given weak capital expenditure execution.
Nigeria’s continued dependence on domestic borrowing is crowding out private sector credit and increasing refinancing risks. Debt servicing remains a major fiscal constraint. Under the proposed 2026 framework, debt-service costs are estimated at ₦15.9 trillion, absorbing a substantial share of projected revenue and further limiting fiscal flexibility.
The Federal Government proposes a ₦54.5 trillion budget for 2026, supported by projected revenue of ₦34.33 trillion, implying a deficit of approximately ₦20 trillion. Macroeconomic assumptions underpinning the framework include oil production of 1.84 mbpd, oil price benchmark of US$64.85/bbl, exchange rate of ₦1,512/US$ and GDP growth of 4.68%. While the economic team defended these assumptions as achievable, lawmakers remain unconvinced, insisting on a public hearing to interrogate revenue underperformance before approving the MTEF/FSP.
Nigeria’s macro reform narrative remains intact, but near-term fiscal stress and weak budget execution pose material risks. Overall, the emerging fiscal outlook reinforces concerns about Nigeria’s medium-term sustainability. While policy reforms are underway, weak revenue mobilisation, persistent execution gaps, and rising debt-service obligations continue to constrain fiscal space and undermine investor confidence. Without a credible improvement in revenue performance, spending efficiency, and debt management, the proposed MTEF risks entrenching rollover dependence and elevated borrowing needs, leaving Nigeria vulnerable to refinancing pressures and limiting the effectiveness of future fiscal policy.
Click here to download full report: CSL Nigeria Daily – 17 November 2025 – Budget.pdf
