FG records N4.69trn fiscal deficit in Q1’26 as revenue falls

•Nigeria’s economy grows 3.89% – Budget Office By Udeme Akpan The Federal Government (FG) recorded an aggregate fiscal deficit of N4.69 trillion in the first quarter of 2026, as revenue generation fell significantly below target, highlighting challenges in financing the 2026 budget. This came as Nigeria’s economy grew by 3.89 per cent in real terms during the quarter, driven by improved performance in the oil and non-oil sectors.

Figures from the Budget Office of the Federation (BOF), contained in its 2026 Budget Performance Report, showed that the fiscal deficit was N4.69 trillion, compared with the prorated target of N7.86 trillion for the January–March period, representing N3.18 trillion below projection. The report showed that aggregate Federal Government revenue stood at N5.08 trillion, compared with the quarterly target of N9.22 trillion, resulting in a shortfall of N4.14 trillion.

This represented about 55 per cent of projected revenue. Similarly, aggregate government expenditure amounted to N9.76 trillion, against the projected N17.08 trillion, indicating an underperformance of N7.32 trillion, or about 57.2 per cent of the target. On deficit financing, domestic borrowing stood at N3.9 trillion, compared with the prorated target of N4.61 trillion, leaving a shortfall of N704.03 billion.

However, foreign borrowing, projected at N2.70 trillion for the quarter, recorded no actual inflow during the period. The Federal Government also realised N287.44 billion from multilateral and bilateral project-tied loans, against the quarterly target of N512.23 billion, while privatisation proceeds stood at N3.32 billion, compared with the projected N47.29 billion.

The figures highlight the government’s difficulties in generating sufficient revenue and accessing planned financing sources to support budget implementation. Nigeria’s economy grows 3.89% On economic performance, the Budget Office reported that the oil sector grew by 2.57 per cent year-on-year in real terms during the first quarter, up by 0.70 percentage points from 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 accounting for 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.” However, it identified weak, although 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 intensify efforts to improve economic growth and revenue generation, while controlling recurrent expenditure, particularly personnel costs. On strategies to strengthen the economy, the Budget Office identified 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 sufficient room for productive private-sector credit, investment and employment generation.

It added that controlling recurrent expenditure, particularly personnel costs, and addressing security challenges remained 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.