Senate grills FG over debt, revenue gaps in N58.4tn budget proposal
Nigeria’s upper legislative chamber on Thursday subjected key members of the Federal Government’s economic management team to intense scrutiny over rising public debt, revenue assumptions and oil production benchmarks embedded in the proposed 2026 fiscal plan.
At a five-hour interactive session convened by the Senate Committee on Appropriations, lawmakers pressed the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Chairman of the Nigeria Revenue Service, Zacch Adedeji, to justify projections underpinning the N58.472tn Appropriation Bill.
The hearing, chaired by Senator Solomon Olamilekan Adeola, focused on concerns that the budget’s assumptions may be overly optimistic, particularly in light of recent shortfalls in oil revenue and mounting debt service obligations.
Senate grills FG over debt sustainability and oil targets
Lawmakers questioned the oil production benchmark of 1.84 million barrels per day, describing it as ambitious given ongoing security and infrastructure constraints in the Niger Delta.
In his response, Edun characterised the figure as a “stretch target,” arguing that higher benchmarks are designed to incentivise improved output and institutional performance. However, he emphasised that fiscal prudence would prevail if revenue underperforms.
“As long as expenditure is aligned with actual inflows, macroeconomic stability will not be compromised,” he told the panel.
The Senate grills FG session also revisited Nigeria’s debt profile, currently estimated at about N152tn. Several senators expressed unease about the growing share of revenue devoted to debt servicing, warning that fiscal space is narrowing.
Edun maintained that Nigeria’s core challenge is not necessarily the debt-to-GDP ratio but the elevated cost of borrowing in international capital markets. According to him, developing countries are compelled to issue debt at higher interest rates due to global risk perceptions and tightening monetary conditions abroad.
He noted that Nigeria is chairing the technical group of the Intergovernmental Group of Twenty-Four, where discussions on debt sustainability and global interest rate pressures are ongoing.
Revenue realism versus budget ambition
A central theme as the Senate grills FG was the credibility of revenue projections. Adedeji cautioned that budget effectiveness depends less on size and more on implementation capacity.
“Budget efficiency is determined by what can be realistically executed,” he said, warning against inflating revenue expectations beyond feasible thresholds.
He clarified that under the Petroleum Industry Act, government revenue from crude oil production primarily comprises taxes and royalties, since the Nigerian National Petroleum Company Limited operates as a limited liability company.
This structure means that production cost dynamics significantly affect net government earnings. High operational expenses or output disruptions can materially reduce fiscal receipts.
Adeola cited historical discrepancies between projected and actual oil revenue performance, questioning how prior execution rates below 20 per cent could justify a projection exceeding 36 per cent in the upcoming fiscal year.
The Senate grills FG session therefore centred on whether lawmakers should revise the total budget envelope downward or proceed with adjustments during implementation.
Capital releases and execution gaps
Beyond revenue and debt metrics, lawmakers also interrogated the implementation record of prior budgets, particularly delays in releasing capital funds to Ministries, Departments and Agencies.
The Minister of State for Finance, Doris Uzoka-Anite, assured the committee that outstanding capital payments under the 2024 and 2025 budgets would be processed before March 31, 2026.
She disclosed that the government’s financial management platform had resumed operations and that MDAs had been directed to upload their cash plans to enable prompt disbursement.
The Senate grills FG exchange reflected broader legislative concern that recurrent expenditure often receives priority while capital components lag, undermining infrastructure delivery and growth objectives.
Debt structure and fiscal vulnerability
Data from the Debt Management Office indicate that multilateral lenders remain Nigeria’s largest external creditors, with significant exposure from concessional facilities.
However, commercial instruments such as Eurobonds account for a sizeable portion of the portfolio, exposing the country to shifts in global interest rates and investor sentiment.
Edun acknowledged that international pricing conditions have made external borrowing costlier, especially for emerging markets navigating currency volatility and capital outflows.
“When credibility weakens, exchange rate pressures intensify,” he said, referencing the need to maintain policy discipline.
The Senate grills FG deliberations therefore highlighted a core fiscal dilemma: balancing developmental expenditure needs against the imperative of containing debt service burdens.
Security spending and macroeconomic trade-offs
Security funding also featured prominently in the hearing. Edun informed lawmakers that emergency allocations had been made to support procurement of critical equipment, including foreign-denominated payments executed recently.
He argued that stabilising security conditions is foundational to improving oil output, strengthening investor confidence and achieving revenue targets.
Nevertheless, some senators warned that persistent security outlays, if not matched by tangible improvements, could crowd out essential development spending.
Broader policy context
The hearing concluded with a closed-door session, signalling that further technical clarifications may be required before the budget advances through legislative stages.
Also present were the Minister of Budget and Economic Planning, Atiku Bagudu, and the Accountant-General of the Federation, Shamsedeen Babatunde Ogunjimi.
As the Senate grills FG process continues, analysts say the debate underscores a pivotal fiscal moment. With revenue mobilisation reforms underway and debt servicing absorbing a substantial share of government income, the credibility of projections will significantly shape investor perception and macroeconomic stability.
The coming weeks will determine whether lawmakers endorse the existing framework or recalibrate assumptions to reflect a more conservative outlook.
Either way, the session reinforced legislative insistence on transparency, accountability and realism in fiscal planning.
