Nigeria Debt Repayment May Crowd Out Socioeconomic Priorities

Nigeria’s debt burden is set to worsen in the coming year, with debt service projected to consume 46 % of revenue. This could crowd out funding for developmental initiatives and infrastructure expansion. The Centre for the Promotion of Private Enterprise (CPPE) warned that allocating N15.9 trillion to repay debt may leave little for socio‑economic priorities such as security, social programmes and infrastructure investment.

In response, the government has adopted a new approach to achieve more realistic revenue projections, following the approval of the 2026‑2028 Medium‑Term Expenditure Framework (MTEF). The framework reduces the 2026 revenue estimate to N34.3 trillion, down from this year’s N36.4 trillion—a 16 % cut. This adjustment aims to align revenue forecasts with actual outcomes, even as fiscal growth is expected to receive a boost from several tax reforms slated to begin in January.

The CPPE expects project costs to be affected by exchange‑rate pressures, with the foreign‑exchange market likely to be strained by a liquidity squeeze stemming from political activities ahead of the 2027 election. The naira is projected to average N1,540 to the dollar in 2026, up from the current N1,447, though this increase is modest compared with the volatility recorded in 2023‑2024. The government has also lowered its oil‑price assumption to $64.9 per barrel in 2026, down from $75 this year. While this is a step in the right direction, it remains above the benchmarks set by the U.S. Energy Information Administration, Goldman Sachs and the World Bank.

Nigeria’s technical oil‑production target for 2026 is 2.1 million barrels per day, with a benchmark budget production of 1.8 million barrels per day. The CPPE recommends a more conservative benchmark of 1.6 million barrels per day to ensure fiscal resilience. The new MTEF is expected to strengthen budget credibility and promote 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. Nonetheless, the worsening debt burden and potential exchange‑rate pressures pose significant challenges to the country’s socio‑economic development and infrastructure expansion plans.