Why Nigeria’ll continue borrowing to fund budget deficit – Senate
By Ndukaku Ihe
The Senate has said despite public opposition, the Nigerian government will continue borrowing to finance budget deficits which stood at N25.91 trillion in the 2026 budget proposal presented by President Bola Tinubu in December, 2025.
Chairman of the Senate Committee on Appropriations, Solomon Olamilekan Adeola, who disclosed this on Monday, also declared that the National Assembly would no longer approve extensions of budget implementation cycles, emphasising that strict timelines, stronger oversight and improved fiscal discipline would guide the execution of the 2026 Appropriation Act.
Adeola made the remarks during his welcome address at the public hearing on the 2026 Appropriation Bill at the National Assembly, which was attended by the Minister of State for Finance, the Accountant General of the Federation, economists, fiscal policy experts, and senior government officials.
“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,” Adeola stated.
He stressed that Nigeria’s development challenges and infrastructure deficit make borrowing inevitable, but warned that the government must adopt smarter, more sustainable deficit-financing strategies.
“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,” he said.
While acknowledging that debt servicing remains a challenge, Adeola said Nigeria must continue to honour its obligations to protect its sovereign credit rating and global economic standing.
The Appropriations chairman explained that, rather than relying heavily on domestic borrowing, which could crowd out private sector credit, the government is exploring asset optimisation, privatisation, Public-Private Partnerships (PPPs), joint venture asset leveraging, and Eurobond issuances.
“The government is deliberately avoiding excessive domestic borrowing that could crowd out private sector credit. Instead, we are exploring external financing, asset sales, and privatisation to bridge revenue gaps,” he said.
Earlier, economist and fiscal policy expert, Dr. Olatilewa Adebanjo warned that Nigeria’s rising budget deficit could become unsustainable unless urgent measures are taken to strengthen revenue mobilisation and enforce fiscal responsibility.
He called for a comprehensive review and stricter implementation of the Fiscal Responsibility Act (FRA), describing it as a powerful but underutilised legal instrument.
“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,” Adebanjo said.
He specifically warned of massive revenue losses in the mining and solid minerals sector, alleging that foreign interests, particularly Chinese companies, are extracting Nigeria’s resources with minimal financial benefit to the country.
“What we continue to see is a situation where foreign actors, especially Chinese interests, come into the country, extract our mineral resources, and leave with enormous value, while Nigeria earns little or nothing in return. This is a wake-up call,” he stated.
Adebanjo also faulted unrealistic revenue projections, insisting that the government must budget based on credible, achievable figures.
“The government must deal with realistic figures, not just projections on paper. Revenue agencies must be compelled to work with actuals and be held accountable for performance,” he said.
While commending some agencies for improved performance, he urged sustained pressure to ensure higher revenue inflows, noting that rising revenue is critical to strengthening government capacity. On deficit financing, Adebanjo said he was reassured by Adeola’s clarification that the government intends to rely more on asset sales and joint venture asset leverage rather than excessive borrowing.
