The federal government has planned to borrow N17.89 trillion, both from domestic and foreign sources to fund the N20.12 trillion deficit in 2026 budget.
According to the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning, of the total amount, N14.31 trillion representing 80 percent, will be sourced from the domestic market, while N3.58 trillion (20 percent) will be sourced from external creditors.
The document showed that from 2026 to 2027, total borrowing is expected to rise from N17.89 trillion to N21.18 trillion, however , a drop is expected in 2028, from N21.18 trillion to N15.84 trillion.
The total deficit at N20.12 trillion is a 43 per cent increase compared to N14.10 trillion in the 2025 budget.
According to the document, the deficit to gross domestic product ratio is projected to decline from 4.17 percent in 2025 to 3.61 percent in 2026, reflecting a higher projected GDP base. The deficit ratio is expected to ease further to 3.24 per cent in 2027 and 1.92 per cent in 2028.
Debt service costs are also expected to rise from N13.94 trillion in 2025 to N15.52 trillion in 2026, an increase of N1.58 trillion.
BusinessDay’s analysis showed that the cost of serving debt as compared to revenue will stand at 45 percent in 2026.The ratio is projected to rise further to 53 percent in 2027 and then ease to 47 percent in 2028.
Total federal expenditure is expected to edge down from N54.99 trillion in 2025 to N54.46 trillion in 2026, but the composition of spending continues to tilt towards recurrent items and debt service.
Recurrent non-debt expenditure is expected to rise from N13.59 trillion in 2025 to N15.27 trillion in 2026.
Of this, N8.36 trillion is to be spent on personnel costs for ministries and departments, while pensions, gratuities, and retirees’ benefits will gulp N1.38 trillion. Other service-wide votes, including key national programmes, will rise from N1.06 trillion in 2025 to N1.85 trillion in 2026.
However, Capital expenditure is reduced from N26.19 trillion in 2025 to N22.37 trillion in 2026. This is as the government plans to roll over 70 per cent of the 2025 capital allocations for MDAs into 2026.
According to the document, the Federal Government has established a framework for the 2026 Capital Budget, setting MDAs’ budget ceilings at 70 per cent of their 2025 project allocations.
This approach, it stated, is based on the commitment to release 30 per cent of the 2025 Capital Budget within the current fiscal year, with the remaining 70 percent balance being directly retained as the foundation for the 2026 budget rather than undergoing a traditional roll-over process.
