Tinubu’s ₦68.3tn budget raises debt concerns as NASS approves fresh loans

Nigeria’s fiscal roadmap for 2026 has taken shape after the National Assembly approved a ₦68.3 trillion Appropriation Bill, marking a significant increase from the original proposal submitted by President Bola Ahmed Tinubu.

The passage by both the Senate and the House of Representatives followed an executive request to raise the budget by an additional ₦9 trillion, a move lawmakers said was necessary to align government spending with evolving financing plans and safeguard macroeconomic stability.

The approval underscores the administration’s expansive fiscal posture as it seeks to balance infrastructure investment, debt obligations, and economic reforms amid lingering pressures on inflation, exchange rates, and revenue generation.

Budget expansion and rationale

The upward revision of the budget reflects the government’s attempt to reconcile ambitious spending targets with fiscal realities. Officials argued that the increase would enable the federal government to better accommodate priority sectors while maintaining stability in key macroeconomic indicators.

Nigeria’s recent budgets have steadily grown in size, driven by rising debt servicing costs, subsidy reforms, and a push for infrastructure-led growth. Analysts note that while higher spending can stimulate economic activity, it also raises concerns about deficit financing and debt sustainability.

The Tinubu administration has repeatedly emphasised its commitment to broadening the revenue base through tax reforms, improved oil production, and enhanced non-oil exports. However, persistent revenue shortfalls have often forced reliance on borrowing to bridge fiscal gaps.

Fresh external borrowing approved

Alongside the budget, lawmakers approved two separate loan requests from the president, signalling continued dependence on external financing to support development projects and stabilise the economy.

The first approval covers a $5 billion facility from the First Abu Dhabi Bank of the United Arab Emirates. The loan is intended to establish an external financing programme, which government officials say will provide liquidity support and help manage fiscal pressures.

The second approval is for $1.9 billion to be sourced from Citi Bank in London. The funds are earmarked for the upgrade of two of Nigeria’s most critical maritime gateways—Apapa Port and Tin Can Island Port—both located in Lagos.

Strategic importance of port upgrades

The planned modernisation of Apapa and Tin Can Island ports is seen as a crucial step toward improving trade efficiency in Africa’s largest economy. The ports handle a significant share of Nigeria’s imports and exports but have long been plagued by congestion, outdated infrastructure, and logistical bottlenecks.

Upgrading these facilities is expected to reduce turnaround time for cargo, enhance customs processing, and ultimately lower the cost of doing business. For a country heavily reliant on imports and striving to boost non-oil exports, efficient port operations are considered vital.

Economic analysts say the investment could also complement ongoing reforms in the maritime and transport sectors, including efforts to digitise port operations and improve road connectivity around Lagos’ commercial hubs.

Debt concerns persist

Despite the potential benefits, the new borrowing approvals are likely to reignite debates about Nigeria’s rising debt profile. In recent years, debt servicing has consumed a substantial portion of government revenue, limiting fiscal space for capital expenditure.

The government has maintained that its borrowing strategy is targeted and sustainable, focusing on concessional loans and projects with clear economic returns. Still, experts caution that without a commensurate increase in revenue, additional debt could exacerbate fiscal vulnerabilities.

Nigeria’s debt-to-GDP ratio remains relatively moderate compared to some peer economies, but its debt-to-revenue ratio—widely regarded as a more critical measure of fiscal health—remains high.

Broader economic context

The 2026 budget comes at a time when Nigeria is navigating a complex economic transition. Reforms such as the removal of fuel subsidies and exchange rate unification have been aimed at stabilising the economy and attracting investment, but they have also contributed to short-term inflationary pressures.

Government officials argue that the expanded budget will help cushion the social impact of these reforms while accelerating growth through infrastructure and public investment.

As implementation begins, attention will likely shift to how effectively the government can execute the budget, manage its borrowing, and deliver tangible economic improvements.

For now, the National Assembly’s approval sets the stage for what could be one of Nigeria’s most ambitious fiscal years, with high expectations—and equally significant risks—attached.