Nigeria is taking a new approach towards achieving more realistic revenue projections and preventing a recurrence of instances in the past, where over-ambitious forecasts led to underperformance, according to a report released on Sunday.
However, next year’s revenue is bound to be pressured by a worsening debt burden, with debt service estimated to consume 46 per cent of revenue.
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This may crowd out the allocations that could have been allocated to developmental initiatives and infrastructure expansion, the Centre for the Promotion of Private Enterprise (CPPE), which issued the document, stated.
Setting aside as much as N15.9 trillion to repay debt, the organisation warned, may also leave little for socio-economic priorities, such as security, social programmes, and infrastructure investment.
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“By adopting more cautious revenue and expenditure assumptions, the new MTEF strengthens the foundation for improved budget credibility and more sustainable fiscal outcomes,” the organisation said.
Its positive outlook on budget credibility derives from last week’s approval of the 2026-2028 Medium-Term Expenditure Framework by the government, which cut the 2026 revenue estimate to N34.3 trillion from this year’s N36.4 trillion.
The 16 per cent reduction reflects a clear effort to ensure that revenue projections align with outcomes, even when fiscal growth is set to receive a major boost from the implementation of several tax reforms kicking off in January.
That step could help narrow the gulf that has long existed between implementation and actual appropriations, helping restore public trust.
Exchange rate
CPPE expects project costs to be affected by exchange rate pressures, anticipating that the FX market will be strained by a liquidity squeeze resulting from political activities leading up to the 2027 election.
According to MTEF, the rate of converting the naira to the dollar, which has experienced reasonable stability this year, closing at N1,447 to a dollar on Friday, is expected to average N1,540 in 2026.
However, the projected increase in the exchange rate is unlikely to be significant, compared to the volatility recorded between 2023 and 2024, when the naira depreciated by as much as 70 per cent, following two major devaluation rounds.
Oil price and output
The government has pared down its oil price assumption to $64.9 per barrel in 2026 from the $75 for this year, a move CPPE sees as a step in the right direction.
Yet, that benchmark is still some way off from those of the US Energy Information Administration, Goldman Sachs and the World Bank, which are set at $55, $56 and $60, respectively.
Nigeria’s technical production target for oil in 2026 is set at 2.1 million barrels per day (mbpd), while the benchmark budget production is 1.8 mbpd.
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“Using 1.80 mbpd as the revenue basis is significantly more prudent than the 2.06 mbpd used in the 2025 budget, especially given chronic underproduction, vandalism, theft, and operational bottlenecks,” CPPE said
“However, based on historical production trends, the CPPE proposes an even more conservative benchmark of 1.6 mbpd to ensure fiscal resilience,” it added.
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