Fiscal Tightrope: CBN Forecasts Growing Debt Amid Economic Risks
Rising Debt Amid Recovery Efforts
THE Central Bank of Nigeria (CBN) projects that the nation’s public debt will reach 34.68% of GDP by the end of 2026, according to its Macroeconomic Outlook for Nigeria, 2026. While only a slight uptick from the 33.98% recorded in mid-2025, the forecast highlights persistent fiscal deficits and continued reliance on borrowing to fund government operations.
Released under the theme “Consolidating Macroeconomic Stability Amid Global Uncertainty,” the report underscores that although Nigeria has recorded improvements in fiscal space from reforms and oil sector stability, macro-fiscal challenges remain persistent.
Deficit, Revenue, and Expenditure Expectations
For 2026, the Federal Government’s internal revenue is projected at ₦35.51 trillion, while expenditures are anticipated to reach ₦47.64 trillion. This results in an expected deficit of ₦12.14 trillion, equivalent to 3.01% of GDP, requiring strategic borrowing to bridge the gap.
The CBN identified non-oil revenue expansion, further implementation of the Nigeria Tax Act, 2025, and enhanced structural reforms as keys to achieving a more resilient fiscal framework.
Macroeconomic Risks and Policy Imperatives
Despite positive reform themes, the Bank warned that rising public debt could present a drag on macroeconomic stability if fiscal discipline weakens. Excessive expenditure could undermine inflation control, place pressure on the exchange rate, and erode investor confidence.
External risks such as oil production disruptions, adverse weather conditions, and geopolitical instability were also cited as factors that could worsen fiscal and financial conditions. Additionally, sudden shifts in global financial markets could trigger capital outflows, increasing financing costs and raising the country’s debt servicing burden.
The CBN urged adherence to fiscal rules and a tight alignment of borrowing plans with medium-term debt sustainability frameworks to safeguard economic stability amid evolving global uncertainties.
