Nigeria’s debt burden is expected to worsen in the coming year, with debt service estimated to consume 46% of revenue, potentially crowding out allocations for developmental initiatives and infrastructure expansion. The Centre for the Promotion of Private Enterprise (CPPE) warned that setting aside N15.9 trillion to repay debt may leave little for socio-economic priorities such as security, social programs, and infrastructure investment.
The Nigerian government has taken a new approach towards achieving more realistic revenue projections, following the approval of the 2026-2028 Medium-Term Expenditure Framework (MTEF). The framework cuts the 2026 revenue estimate to N34.3 trillion from this year’s N36.4 trillion, reflecting a 16% reduction. This move is seen as an effort to ensure that revenue projections align with outcomes, even with fiscal growth expected to receive a boost from the implementation of several tax reforms starting in January.
The CPPE expects project costs to be affected by exchange rate pressures, with the FX market likely to be strained by a liquidity squeeze resulting from political activities leading up to the 2027 election. The naira is expected to average N1,540 to the dollar in 2026, up from the current rate of N1,447. However, the projected increase is unlikely to be significant compared to the volatility recorded between 2023 and 2024.
The government has also pared down its oil price assumption to $64.9 per barrel in 2026, down from $75 for this year. While this is seen as a step in the right direction, it remains higher than the benchmarks set by the US Energy Information Administration, Goldman Sachs, and the World Bank. Nigeria’s technical production target for oil in 2026 is set at 2.1 million barrels per day, while the benchmark budget production is 1.8 million barrels per day. The CPPE proposes a more conservative benchmark of 1.6 million barrels per day to ensure fiscal resilience.
The new MTEF is expected to strengthen the foundation for improved budget credibility and more sustainable fiscal outcomes. By adopting more cautious revenue and expenditure assumptions, the government aims to narrow the gap between implementation and actual appropriations, helping to restore public trust. However, the worsening debt burden and potential exchange rate pressures may pose significant challenges to the country’s socio-economic development and infrastructure expansion plans.