CPPE flags unrealistic macroeconomic assumptions as major weakness of Nigeria’s budget process

The Centre for the Promotion of Private Enterprise (CPPE) has identified persistent revenue underperformance, rooted in overly optimistic macroeconomic assumptions, as one of the major weaknesses of Nigeria’s budget process.

Muda Yusuf, chief executive officer of CPPE, stated this on Sunday in a policy brief on the 2026–2028 Medium-Term Expenditure Framework (MTEF). He said the MTEF signals a welcome and deliberate shift towards more conservative, realistic and credible fiscal planning.

According to Yusuf, the unrealistic macroeconomic assumption has repeatedly resulted in wide gaps between appropriations and actual implementation, weakening fiscal outcomes and undermining public trust.

He said, “The unrealistic assumptions of the 2025 budget were particularly damaging, contributing to implementation shortfalls and widening credibility gaps.

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“The emerging shift toward more realistic assumptions in the 2026–2028 MTEF is therefore commendable. It represents an important step toward reducing variances between projected and realised outcomes and toward restoring the budget as a credible governance tool rather than a routine, ceremonial annual document.”

The MTEF, according to Yusuf, responds to heightened global uncertainties, Nigeria’s domestic fiscal pressures, recurring missed revenue targets, the pre-election dynamics expected in 2026, and the longstanding challenges around oil production and oil-price volatility.

He emphasised that by adopting more cautious revenue and expenditure assumptions, the new MTEF strengthens the foundation for improved budget credibility and more sustainable fiscal outcomes.

He however said that the shift, though significant, does not go far enough, particularly regarding crude oil price and output assumptions.

Yusuf said that using 1.80 million barrels per day (mbpd) as the revenue basis is significantly more prudent than the 2.06 mbpd used in the 2025 budget, especially given under production, vandalism, theft, and operational bottlenecks.

However, based on historical production trends, the CPPE proposes an even more conservative benchmark of 1.6 mbpd to ensure fiscal resilience.

“The 2026 oil price benchmark of $64.85 per barrel, down from $75 in the 2025 budget, also reflects a more cautious approach. Nonetheless, even this estimate is still somewhat optimistic, given global forecasts: U.S. Energy Information Administration [EIA] at $55/barrel, Goldman Sachs at $56/barrel amd World Bank at $60/barrel.

“These projections are driven by expectations of increased global supply, moderating demand, and rising inventories. Aligning Nigeria’s benchmark closer to $60/barrel would strengthen the MTEF’s resilience.”

Yusuf further stated that for Nigeria’s budget process to evolve into a truly effective tool of governance, rather than an annual procedural formality, both the Executive and the Legislature must uphold the principles of realistic and evidence-based assumptions, transparent and credible fiscal planning and improved implementation efficiency.

He said that if sustained, these reforms will help entrench macroeconomic stability, rebuild public confidence, and enhance the credibility of the budget process.

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