The Federal Government posted an aggregate fiscal deficit of ₦4.69 trillion in the first quarter of 2026, as revenue came in far below target, underscoring the challenge of financing the 2026 budget.
The development coincided with a 3.89 per cent real growth in Nigeria’s economy during the quarter, driven by better performance in the oil and non-oil sectors.
Figures from the Budget Office of the Federation, contained in its 2026 Budget Performance Report, showed that the fiscal deficit of ₦4.69 trillion compared with a prorated target of ₦7.86 trillion for the January to March period, which is ₦3.18 trillion below projection.
The report showed that aggregate Federal Government revenue was ₦5.08 trillion against a quarterly target of ₦9.22 trillion, leaving a shortfall of ₦4.14 trillion, or about 55 per cent of projected revenue.
Aggregate government expenditure was ₦9.76 trillion against a projection of ₦17.08 trillion, an underperformance of ₦7.32 trillion, or about 57.2 per cent of the target.
On deficit financing, domestic borrowing stood at ₦3.9 trillion against a prorated target of ₦4.61 trillion, leaving a shortfall of ₦704.03 billion.
Foreign borrowing, which was projected at ₦2.70 trillion for the quarter, recorded no actual inflow during the period.
The Federal Government also realised ₦287.44 billion from multilateral and bilateral project-tied loans against a quarterly target of ₦512.23 billion.
Privatisation proceeds stood at ₦3.32 billion compared with a projected ₦47.29 billion.
The figures highlight the government’s difficulty in generating enough revenue and accessing planned financing sources to support budget implementation.
On economic performance, the Budget Office reported that the oil sector grew by 2.57 per cent year-on-year in real terms in the first quarter, which is 0.70 percentage points higher than the 1.87 per cent recorded in the corresponding period of 2025.
The non-oil sector expanded by 3.94 per cent, outperforming the oil sector and contributing a larger share of the economy’s growth.
The Budget Office described the performance as “a period of macroeconomic stabilisation accompanied by moderate real-sector expansion.”
It, however, identified weak but improving revenue performance as a major constraint to budget execution, noting that the Federal Government continued to meet its non-discretionary expenditure obligations.
It stated: “Improving revenue collections in the subsequent quarters of the year is critical to the successful execution of the 2026 Budget.”
The report said the government would step up efforts to improve economic growth and revenue generation while controlling recurrent expenditure, particularly personnel costs.
On strategies to strengthen the economy, the Budget Office named oil production recovery, tax-base expansion, improved tax compliance, increased domestic production, agricultural productivity, infrastructure development, private-sector credit and export diversification as key priorities.
It stated: “The central policy challenge for the remainder of 2026 is therefore not simply to preserve stability, but to convert stability into higher productive capacity and stronger domestic revenue mobilisation.”
The report further explained that consolidating gains in inflation management, exchange-rate stability and the external sector would require creating enough room for productive private-sector credit, investment and employment generation.
It added that controlling recurrent expenditure, particularly personnel costs, and addressing security challenges remain important to improving fiscal performance.
On budget implementation, the Budget Office reaffirmed the Federal Government’s commitment to transparency and accountability, stating that it would ensure “firm adherence to budget implementation guidelines and the governance framework on monitoring of capital budget implementation.”
It added that efforts would focus on improving budget execution efficiency and ensuring effective project management in the remaining quarters of 2026.
