Senate to Fed Govt: Borrowing unavoidable but impact must justify deficit
• Red Chamber holds national public hearing on 2027 budget The Senate yesterday told the Federal Government that borrowing is unavoidable when there are clear reasons to do so, especially
• Red Chamber holds national public hearing on 2027 budget
The Senate yesterday told the Federal Government that borrowing is unavoidable when there are clear reasons to do so, especially to bridge its widening fiscal gap.
But the Red Chamber, economic managers, and experts stressed that the era of unchecked deficits and weak implementation must end.
The Senate stated its borrowing position when the National Assembly held a public hearing on this year’s Appropriation Bill.
The Chairman of the Senate Committee on Appropriations, Solomon Olamilekan Adeola, stated this in his remarks during the public hearing on this year’s budget yesterday in Abuja.
The committee chairman said borrowing remains inevitable given Nigeria’s infrastructure deficit and volatile revenue streams.
He, however, stressed that the key challenge is not borrowing itself but how deficits are financed and deployed.
Adeola said: “On deficit financing, borrowing cannot be entirely avoided. Revenue inflows are unpredictable. Some months underperform; others exceed projections. What matters is not whether or not we borrow but how deficits are funded and how borrowed resources are deployed.”
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The committee chairman explained that the Federal Government was deliberately avoiding excessive domestic borrowing that could crowd out private sector credit, opting instead for a mix of external financing, asset optimisation, privatisation, Eurobonds and Public-Private Partnerships (PPPs).
“Nigeria cannot help but keep borrowing because revenue inflows are unpredictable and development needs are enormous. What matters is how we borrow and how we fund our deficits,” Adeola added.
The committee chairman said Nigeria’s debt burden is worsened by high servicing costs and legacy liabilities.
He alluded to past fuel subsidy payments, which were funded largely through borrowing.
“As a former Chairman of the Senate Committee on Finance, I can state clearly that we budgeted up to N7 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 announced a proposed 2026 budget projects aggregate expenditure of N58.47 trillion against an expected revenue of n33.19 trillion, leaving a deficit of N25.27 trillion, with debt servicing estimated at N15.90 trillion.
Adeola threatened that the National Assembly would no longer approve the 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.
Adeola called for greater deployment of PPPs and concessioning of infrastructure to generate revenue and reduce fiscal pressure.
The committee chairman also called for full subsidy removal and the unbundling of the electricity sector to free up resources for development.
He said this year’s 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.
Adeola assured fellow Nigerians 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,” he said.
The Minister of State for Finance, Dr. Doris Nkiruka Uzoka-Anite, said borrowing must be tied to reforms and tangible outcomes.
The minister noted 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.
Uzoka-Anite 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.
The minister noted that Nigeria’s debt-to-GDP ratio remained moderate but described the cost of servicing debt as a pressing challenge.
Senate President Godswill Akpabio, who was represented by Deputy Senate President Barau Jibrin, described this year’s 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.”
The Senate President 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.
Also, 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. An 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 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), Bashir Abubakar, also decried abandoned projects, inflated contract costs and poor execution by Ministries, Departments and Agencies (MDAs).
He urged stronger legislative oversight to restore public trust.
