The Federal Government recorded a fiscal deficit of ₦4.69 trillion in the first quarter of 2026, as revenue generation fell significantly below target, raising concerns over budget implementation.
This was despite Nigeria’s economy growing by 3.89 per cent in real terms during the quarter, supported by improved performance in the oil and non-oil sectors.
Figures from the Budget Office of the Federation’s 2026 Budget Performance Report showed that the deficit stood at ₦4.69 trillion, compared with the prorated target of ₦7.86 trillion for January to March.
The report indicated that the actual deficit was ₦3.18 trillion below the quarterly projection.
Government Revenue Falls ₦4.14tn Below Target
The Federal Government generated ₦5.08 trillion in aggregate revenue during the quarter, against a target of ₦9.22 trillion.
This resulted in a shortfall of ₦4.14 trillion, with actual revenue representing approximately 55 per cent of the projected amount.
Government expenditure also fell below expectations, reaching ₦9.76 trillion against the projected ₦17.08 trillion.
The expenditure figure represented an underperformance of ₦7.32 trillion, or about 57.2 per cent of the quarterly target.
On deficit financing, domestic borrowing stood at ₦3.9 trillion, compared with the prorated target of ₦4.61 trillion. This left a shortfall of ₦704.03 billion.
Foreign borrowing recorded no actual inflow during the quarter, despite a projected target of ₦2.70 trillion.
The government also received ₦287.44 billion from multilateral and bilateral project-tied loans, against the quarterly target of ₦512.23 billion.
Privatisation proceeds amounted to ₦3.32 billion, compared with the projected ₦47.29 billion.
The figures highlight the challenges facing the government in generating sufficient revenue and accessing planned financing sources to support the 2026 budget.
Nigeria’s Economy Grows 3.89% In First Quarter
Despite the fiscal challenges, Nigeria’s economy expanded by 3.89 per cent in real terms during the first quarter of 2026.
According to the Budget Office, the oil sector recorded year-on-year growth of 2.57 per cent.
This represented an improvement of 0.70 percentage points from the 1.87 per cent recorded in the corresponding period of 2025.
The non-oil sector performed better, expanding by 3.94 per cent and accounting for a larger share of economic growth.
The Budget Office described the performance as “a period of macroeconomic stabilisation accompanied by moderate real-sector expansion.”
However, it identified weak, although improving, revenue performance as a major constraint to budget execution.
The report also noted that the Federal Government continued meeting its non-discretionary expenditure obligations.
“Improving revenue collections in the subsequent quarters of the year is critical to the successful execution of the 2026 Budget,” the report stated.
Budget Office Lists Priorities For Economic Growth
The Budget Office said the government would intensify efforts to improve economic growth and revenue generation while controlling recurrent expenditure, particularly personnel costs.
It identified oil production recovery, tax-base expansion and improved tax compliance as key priorities.
Other measures include increasing domestic production, improving agricultural productivity, developing infrastructure, expanding private-sector credit and diversifying exports.
The report 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.”
It added that sustaining improvements in inflation management, exchange-rate stability and the external sector would require greater support for productive private-sector credit, investment and employment generation.
The Budget Office also identified recurrent expenditure control and improved security as important factors in strengthening fiscal performance.
FG Promises Improved Budget Implementation
The Budget Office reaffirmed the Federal Government’s commitment to transparency and accountability in implementing the 2026 budget.
It said the government would maintain strict compliance with budget implementation guidelines and the framework for monitoring capital projects.
The report added that efforts would focus on improving budget execution and ensuring effective project management during the remaining quarters of the year.
