Senate tells FG: Borrowing unavoidable, but impact must justify deficits
Nigeria will continue to borrow to close its expanding fiscal deficit, but lawmakers, economic managers, and experts have warned that the era of unchecked borrowing and weak budget implementation must
- …as Senate holds national public hearing on 2027 budget
Nigeria will continue to borrow to close its expanding fiscal deficit, but lawmakers, economic managers, and experts have warned that the era of unchecked borrowing and weak budget implementation must end.
The caution came during a public hearing on the 2026 Appropriation Bill at the National Assembly.
Senator Solomon Adeola, Chairman of the Senate Committee on Appropriations, acknowledged that borrowing remains inevitable due to Nigeria’s infrastructure deficit and volatile revenue streams. He emphasized, however, that the critical issue is not borrowing itself, but how deficits are financed and deployed.
Revenue inflows are unpredictable. Some months underperform, others exceed projections. What matters is not whether we borrow, but how deficits are funded and how borrowed resources are deployed,” Adeola said.
He explained that the Federal Government is deliberately avoiding excessive domestic borrowing that could crowd out private sector credit, instead opting for a balanced approach involving external financing, asset optimisation, privatisation, Eurobonds, and Public-Private Partnerships (PPPs).
Adeola also highlighted that Nigeria’s debt burden is exacerbated by high servicing costs and legacy liabilities, citing fuel subsidy payments in previous years that were largely funded through borowing.
“As former Chairman of the Senate Committee on Finance, I can state clearly that we budgeted up to ₦7 trillion annually for fuel subsidies that did not exist. We had to borrow. That cycle has now been broken,” he said, referring to President Bola Ahmed Tinubu’s subsidy removal policy.
He disclosed that the proposed 2026 budget projects aggregate expenditure of ₦58.47 trillion against expected revenue of ₦33.19 trillion, leaving a deficit of ₦25.27 trillion, with debt service estimated at ₦15.90 trillion.
Adeola also vowed that the National Assembly would no longer approve extensions of budget implementation cycles, insisting on strict timelines and stronger oversight.
“Never again will the National Assembly approve budget extensions. We must discipline our budgeting cycle, enforce strict adherence to appropriation timelines, and ensure better coordination between policy design and implementation,” he said.
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He urged greater deployment of PPPs and concessioning of infrastructure to generate revenue and reduce fiscal pressure, while calling for full subsidy removal and unbundling of the electricity sector to free up resources for development.
Adeola said the 2026 budget, tagged “Budget of Consolidation, Renewed Resilience and Shared Prosperity,” is anchored on subsidy removal, tax reforms, public finance restructuring and power sector reforms, with sectoral allocations prioritising security, infrastructure, education and health.
He assured that the Senate would intensify oversight, warning MDAs that failure to defend their proposals could lead to reallocations.
“We are not borrowing to consume; we are borrowing to consolidate reforms, complete projects and stabilise the economy,” Adeola said.
Minister of State for Finance, Dr. Doris Nkiruka Uzoka-Anite, said borrowing must be tied to reforms and tangible outcomes, noting that fiscal decisions must directly affect households and businesses.
“This project is designed to align with government priorities, deepen debate around reforms already underway, and ensure that limited national resources are deployed with maximum efficiency and impact,” she said.
She acknowledged public frustration over rising living costs, describing the recovery as fragile despite improved market confidence.
“For ordinary men and women, this shift is more significant than almost any other recent change. It affects livelihoods, infrastructure quality and the stability families need to thrive,” she said, adding that Nigeria’s debt-to-GDP ratio remains moderate but the cost of servicing debt is a pressing challenge.
President of the Senate, Godswill Akpabio, represented by Deputy Senate President, Senator Barau Jibrin, framed the 2026 budget as a moral and historical test for the nation.
“Budgets are not mere rituals of governance. They are moments of national self-examination,” Akpabio said. “A budget is a moral document. It reveals priorities. It exposes values. It answers who and what a nation chooses to protect, promote and preserve.”
He urged lawmakers to ensure borrowed funds translate into measurable outcomes, warning that defaulting on debt obligations would undermine Nigeria’s credit standing and investor confidence.
Similarly, the Accountant General of the Federation, Shamseldeen Olujimi, called for a shift from allocation-driven budgeting to impact-focused implementation.
“We have operated in trillions, yet we ask, where are the roads, where are the hospitals, where are the jobs, where is the impact? The real question is: what changes in the lives of Nigerians because of these allocations?” he said.
Experts and stakeholders at the hearing warned that Nigeria’s rising deficit trajectory could become unsustainable without stronger fiscal discipline and realistic revenue projections. Economist Dr. Olatilewa Adebanjo called for a comprehensive review and stricter enforcement of the Fiscal Responsibility Act (FRA).
“We need to remain alert and proactive. All stakeholders must closely monitor critical sectors to ensure revenues meant for the government actually reach government coffers,” he said, alleging massive revenue losses in the mining and solid minerals sector.
The Chief Commissioner of the Public Complaints Commission (PCC), Hon Bashir Abubakar, also lamented abandoned projects, inflated contract costs, and poor execution by Ministries, Departments, and Agencies (MDAs), urging stronger legislative oversight to restore public trust.
