By Favour Pius
The Federal Government has increased its 2026 borrowing plan to ₦29.20 trillion, reflecting mounting fiscal pressures and a widening budget deficit driven by weak revenue performance and rising expenditure obligations.
The revised borrowing target, analysts say, underscores the government’s growing reliance on debt financing to bridge the gap between earnings and spending, amid persistent macroeconomic challenges.
Industry experts note that the expansion in borrowing is largely tied to increased spending on infrastructure, debt servicing, and social interventions, as authorities seek to stimulate growth while cushioning the impact of economic reforms.
“This signals the depth of the fiscal imbalance,” a Lagos-based economist said. “With revenues still underperforming, borrowing has become the primary tool for funding government operations.”
The development raises fresh concerns over Nigeria’s debt sustainability, particularly as debt service costs continue to consume a significant share of government revenues.
Data from the Debt Management Office (DMO) show that Nigeria’s debt profile has been on an upward trajectory in recent years, with external and domestic borrowings rising to support budget implementation.
From an industry perspective, financial market operators say the increased borrowing could lead to higher yields on government securities, as the government competes more aggressively for funds in the domestic market.
They warn that this could crowd out private sector borrowing, pushing up interest rates and limiting access to credit for businesses.
“Large government borrowing typically tightens liquidity and raises funding costs across the economy,” an investment analyst noted. “This could dampen private sector investment at a time when growth needs to be stimulated.”
However, some stakeholders argue that if efficiently deployed, the borrowed funds could support critical infrastructure projects and drive long-term economic expansion.
They emphasise the need for transparency, fiscal discipline, and improved revenue mobilisation to ensure that rising debt levels remain sustainable.
The widening deficit has also renewed calls for structural reforms aimed at boosting non-oil revenues, improving tax efficiency, and reducing leakages in public finance.
Analysts maintain that without a significant improvement in revenue generation, continued reliance on borrowing may heighten fiscal risks and limit the government’s ability to respond to future economic shocks.
As Nigeria navigates its fiscal challenges, the balance between borrowing for growth and maintaining debt sustainability is expected to remain a key focus for policymakers and investors alike.
