Nigeria’s Federal Government recorded a fiscal deficit of ₦4.69 trillion in the first quarter of 2026, as revenue collected between January and March fell considerably below the amount projected in the national budget.
The figures, published in the Budget Office of the Federation’s 2026 Budget Performance Report, point to continuing difficulties in raising enough money to finance government programmes and meet expenditure commitments.
Despite the revenue shortfall, Nigeria’s economy recorded real growth of 3.89 per cent during the same period, supported by activity in both the oil and non-oil sectors.
According to the report, the government had projected a first-quarter deficit of ₦7.86 trillion. The actual deficit of ₦4.69 trillion was therefore ₦3.18 trillion lower than the prorated target.
However, the lower-than-projected deficit should be viewed alongside the government’s spending performance. Revenue and expenditure both remained significantly below their respective budget targets during the quarter.
Federal Government misses revenue target by ₦4.14 trillion
The Federal Government generated ₦5.08 trillion in revenue during the first three months of the year, compared with its target of ₦9.22 trillion.
This left a shortfall of approximately ₦4.14 trillion, meaning the government collected only about 55 per cent of its expected revenue for the period.
The revenue gap represents a major challenge for the implementation of the 2026 budget, particularly as the government seeks to fund infrastructure, public services and other development priorities.
Government spending also fell below expectations. Total expenditure stood at ₦9.76 trillion, against the quarterly projection of ₦17.08 trillion.
The difference amounted to ₦7.32 trillion, indicating that actual spending was substantially lower than planned.
The figures suggest that limited revenue inflows and difficulties accessing projected financing sources affected the pace of budget implementation during the opening quarter.
Domestic borrowing provides most of the deficit financing
The report also showed that the government relied on domestic borrowing to finance part of its fiscal gap.
Domestic borrowing amounted to ₦3.9 trillion in the first quarter, compared with the prorated target of ₦4.61 trillion. This represented a financing shortfall of ₦704.03 billion.
Foreign borrowing performed more poorly against expectations. Although the government had projected ₦2.70 trillion in foreign loans for the period, no actual inflow was recorded.
The Federal Government received ₦287.44 billion through multilateral and bilateral project-linked loans, below the quarterly target of ₦512.23 billion.
Revenue from privatisation was also limited. The government generated ₦3.32 billion from the process, compared with an expected ₦47.29 billion.
The performance of these financing sources highlights the gap between the funds anticipated in the budget and the resources that actually became available to the government.
Debt servicing adds pressure to government finances
The government’s revenue difficulties have also drawn attention to the amount spent on servicing existing debt.
Separate reporting by BusinessDay on the first-quarter budget performance figures indicated that debt servicing cost the Federal Government approximately ₦4.63 trillion between January and March 2026.
That amount was close to the entire ₦5.08 trillion revenue generated during the period, leaving a relatively small portion of collected funds for other government responsibilities.
The debt-service figure included domestic and external obligations, with both categories exceeding their respective prorated quarterly estimates.
This spending pressure matters because money committed to interest and other debt-service payments cannot be used for other priorities without additional resources.
The combination of weak revenue collection and substantial debt obligations therefore remains an important issue for the country’s fiscal management.
Non-oil sector leads Nigeria’s economic growth
While the budget report highlighted weaknesses in government revenue, it also recorded positive developments in the wider economy.
Nigeria’s real Gross Domestic Product (GDP) expanded by 3.89 per cent year-on-year in the first quarter of 2026.
The non-oil sector grew by 3.94 per cent, making it the stronger contributor to economic expansion during the period.
The oil sector recorded growth of 2.57 per cent, an improvement on the 1.87 per cent recorded in the corresponding quarter of 2025.
The figures indicate that economic activity increased across both sectors, although the stronger performance of the non-oil economy suggests that growth was not driven by petroleum alone.
Nevertheless, stronger GDP growth has not yet translated into the level of government revenue anticipated in the budget.
The Budget Office described the period as one of macroeconomic stabilisation accompanied by moderate expansion in the real economy. It also identified revenue performance as a major constraint on budget implementation.
Government faces pressure to improve revenue collection
The first-quarter figures underline the importance of improving revenue mobilisation as the Federal Government continues implementing its 2026 spending programme.
The Budget Office stressed that stronger revenue collection in subsequent quarters would be necessary to support the successful execution of the budget.
The challenge extends beyond the oil sector. Although the non-oil economy recorded growth, the government still needs to improve the collection of taxes and other internally generated revenue.
The absence of expected foreign loan inflows and the lower-than-planned proceeds from project-linked financing and privatisation also point to the need for more reliable funding arrangements.
For Nigeria, the key issue in the coming quarters will be whether stronger revenue performance can reduce the financing gap and provide sufficient resources for public investment and essential services.
Although the ₦4.69 trillion deficit was below the first-quarter target, the substantial revenue shortfall and debt-service burden show that pressure on government finances remains significant.
