FG Charts New Path to Tackle Rising Debt, Mobilises Mass Savings

•Reveals 70% of 2025 capital budget to be rolled over to 2026

•Says N40trn 2025 revenue target has yielded just N10trn cash

• Senate tasks FIRS with N35trn revenue goal for 2026, demands tax reform education

•Lawmakers kick against multiple budgets in one fiscal year

Sunday Aborisade in Abuja

The federal government, yesterday, formally signalled a major shift in fiscal strategy, declaring that it would move away from heavy dependence on borrowing and, instead, mobilise mass savings across the country as a sustainable way of tackling Nigeria’s rising debt burden.

Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, disclosed the new strategy during an interactive session on the 2026–2028 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), organised by Senate Committee on Finance, at the National Assembly.

Edun said the new direction was imperative in view of persistent revenue shortfalls, mounting fiscal pressures, and the need to strengthen domestic capital formation without further ballooning public debt.

According to him, Nigeria’s total public debt has risen to about N152 trillion, from approximately N70 trillion in 2023, but a substantial part of the increase was not the result of fresh borrowing.

He explained that approximately N30 trillion of the debt stock originated from the formal recognition and regularisation of Ways and Means financing, previously kept outside government accounts, while nearly N50 trillion resulted from exchange rate adjustments following central bank reforms to clear foreign exchange backlogs and rebuild external reserves.

“Consequently, about N80 trillion of the total debt stock did not represent new borrowing, but rather a process of reclassification, regularisation and adjustment,” Edun said.

The minister stressed that the focus of the MTEF was no longer on expanding borrowing, but on strengthening revenue mobilisation, fiscal discipline and long-term sustainability.

He acknowledged that revenue performance had consistently fallen short of projections, putting severe pressure on budget implementation.

In 2024, he said, total revenue was estimated at N25.9 trillion, but actual federal government revenue stood at approximately N8.27 trillion.

Similarly, for 2025, projected revenue of about N40 trillion contrasted sharply with actual cash revenue of roughly N10 trillion, leaving a shortfall of about N30 trillion.

He said, “As a result, treasury management measures and borrowing were used to bridge funding gaps.

“This underscores the urgency of a more realistic and robust revenue framework going into 2026.”

Edun disclosed that the government was rolling out a comprehensive revenue optimisation programme anchored on automation, digitalisation, technology deployment, and process re-engineering.

He said four circulars had already been issued directing revenue and investment-generating ministries, departments, and agencies (MDAs) to migrate to a transparent digital platform, halt cash collections and remit revenues directly to the Treasury Single Account without netting off costs.

On budget implementation, the minister said the capital component of the 2024 budget had been extended into 2025, with funding fully available for completed projects up to September and the remaining portions planned for rollover into the 2026 budget.

For the 2025 capital budget, he said about 30 per cent was currently funded, while about 70 per cent of projects would be rolled over into 2026, subject to National Assembly approval.

Despite the revenue challenges, Edun said the government had consistently met critical obligations, including salaries, pensions, statutory transfers, and debt servicing.

However, he emphasised that long-term economic growth required more than revenue collection, stating that broad-based mobilisation of domestic savings was crucial in an economy where about 90 per cent of activity was driven by the private sector.

“For a country to sustainably grow its economy, there must be broad-based mobilisation of savings,” he said.

Edun revealed that President Bola Tinubu was considering a public-private partnership initiative aimed at mobilising mass savings beyond the relatively small pool of Nigerians with pension and stockbroking accounts.

The initiative, he said, would encourage tens of millions of Nigerians to save and invest productively, providing domestic capital to support growth and ease pressure on government borrowing.

In his remarks, Chairman of Senate Committee on Finance, Senator Sani Musa, called on the Federal Inland Revenue Service (FIRS) to embark on aggressive nationwide public enlightenment ahead of the new tax reform laws scheduled to take effect from January next year.

Musa warned that poor public understanding could undermine the gains of the far-reaching reforms being finalised by the National Assembly.

He said, “With the kind of reforms that are coming, there will be serious issues if Nigerians are not properly enlightened.”

He urged the FIRS, in collaboration with the Ministry of Finance and other agencies, to intensify public communication.

Musa explained that the reforms were aimed at simplifying compliance, harmonising incentives and closing long-standing revenue leakages, while still supporting investment and exports.

As part of the changes, Musa said only 25 per cent of goods produced in special economic and free trade zones would be allowed into Nigeria’s customs territory duty-free, with the remainder attracting applicable taxes and duties.

The senate also expressed displeasure over the implementation of multiple budgets within a single fiscal year, a practice lawmakers said was unacceptable.

Senators Danjuma Goje, Olalere Oyewumi, Victor Umeh, and others criticised the rollover of budgets, warning that unrealistic projections eroded credibility and weakened fiscal discipline.

“This ugly situation of implementing multiple budgets in one year must end. It is not acceptable,” Goje said.

In response, Musa assured his colleagues that budget normalisation would commence from 2026, adding that the committee would set up a three-man ad hoc panel to liaise with the Ministry of Finance and the Office of the Accountant-General on payments to local contractors for 2024 projects.

The senate also tasked FIRS to raise its 2026 revenue projection from N31 trillion to N35 trillion, as the federal government continued efforts to stabilise public finances under the new fiscal strategy.