FG records N4.69trn fiscal deficit in Q1’26 as revenue falls
Nigeria’s Economy Grows 3.89% Amid Fiscal Challenges
By Udeme Akpan
The Federal Government of Nigeria reported a fiscal deficit of 4.69 trillion naira in the first quarter of 2026, driven by significantly lower-than-expected revenue generation. This shortfall underscores the ongoing challenges in funding the 2026 budget.
Despite these financial difficulties, Nigeria’s economy experienced real growth of 3.89% during the same period, buoyed by improvements in both the oil and non-oil sectors.
According to the Budget Office of the Federation’s 2026 Budget Performance Report, the recorded fiscal deficit of 4.69 trillion naira was well below the prorated target of 7.86 trillion naira for the January-March period, representing a variance of 3.18 trillion naira.
Federal Government revenue for the quarter totaled 5.08 trillion naira, falling short of the quarterly target of 9.22 trillion naira by 4.14 trillion naira, or approximately 55% of projected revenue. In contrast, total government expenditure reached 9.76 trillion naira against a forecast of 17.08 trillion naira, reflecting an underperformance of 7.32 trillion naira, or about 57.2% of the target.
Domestic borrowing for deficit financing amounted to 3.9 trillion naira, which was less than the prorated target of 4.61 trillion naira, resulting in a shortfall of 704.03 billion naira. Notably, planned foreign borrowing of 2.70 trillion naira for the quarter resulted in no actual inflow.
The government also secured 287.44 billion naira from multilateral and bilateral project-tied loans, below the quarterly target of 512.23 billion naira. Privatisation proceeds were similarly limited, totaling 3.32 billion naira against an expected 47.29 billion naira.
These figures illustrate the government’s ongoing struggle to generate adequate revenue and access planned financing sources essential for effective budget implementation.
On a more positive note, the oil sector recorded a year-on-year growth of 2.57% in real terms during the first quarter, up from 1.87% in the same period of 2025. Meanwhile, the non-oil sector outpaced the oil sector with a growth rate of 3.94%, contributing more significantly to the overall economic growth.
The Budget Office described this period as one of “macroeconomic stabilization accompanied by moderate real-sector expansion,” while identifying weak, albeit improving, revenue performance as a key barrier to effective budget execution.
Looking ahead, the Budget Office emphasized the necessity of improving revenue collections in the upcoming quarters to support the successful execution of the 2026 Budget. Strategies to strengthen the economy include recovering oil production, expanding the tax base, enhancing tax compliance, boosting domestic production, increasing agricultural productivity, developing infrastructure, and diversifying exports.
The report indicated that the central policy challenge for the remainder of 2026 is to transition from stability to enhanced productive capacity and robust domestic revenue generation. It called for ongoing advances in inflation control, exchange-rate stability, and external sector performance, while also highlighting the importance of managing recurrent expenditure and addressing security challenges to improve fiscal performance.
The Federal Government reasserted its commitment to transparency and accountability in budget implementation, emphasizing adherence to established guidelines and effective project management as critical objectives for the remaining quarters of 2026.
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