Unrealistic Revenue Projections Could See Senate Cut N58.47tn 2026 Budget

The Senate threatened to cut the proposed N58.472 trillion 2026 budget on Thursday. The Appropriation Bill cited weak oil performance benchmarks, inflated income predictions, and ongoing capital budget implementation difficulties.

In a heated exchange between the Senate Committee on Appropriations and the federal government’s economic team, senators publicly questioned the veracity of several crucial underlying assumptions in the record budget request.

In a previous related budget defense development, the National Assembly suggested a N1.5 trillion take-off grant for the Federal Ministry of Art, Culture, Tourism, and the Creative Economy (FMACTCE) in order to reestablish the sector as a major force behind economic diversification and lessen Nigeria’s reliance on oil earnings.

The idea was presented to the Joint Committee on Culture, Art, and Creative Economy during the ministry’s 2025 budget defense. Throughout the meeting, MPs voiced their strong belief that, with the right structure and funding, the industry can produce enormous amounts of income, jobs, and foreign exchange.

According to Hannatu Musa Musawa, Minister of Art, Culture, Tourism, and the Creative Economy, the industry could provide over 2.5 million employment and add $100 billion to Nigeria’s GDP by 2030.

Sen. Solomon Adeola (Ogun West), the chairman of the Senate Committee on Appropriations, questioned the validity of several fundamental tenets of the federal government’s 2026 budget proposal, stating that the budget paper came from the executive branch and needed to include practical and achievable estimates.

Adeola cited instances of 18% performance in one fiscal year and 36.5% in another, percentages well below expectations, to raise concern about what he saw as a persistent disparity between planned and realized oil income.

“How do we account for this degree of poor performance?” “What?” Adeola queried.

“Do we cut this N58.472 trillion budget, or do we go ahead and make changes?” he continued. You are assuring Nigerians that you will achieve these goals if we do not reduce it.

He issued a warning, saying that the legislature would not approve estimates that would increase fiscal pressures because Nigeria’s debt stock is over N152 trillion, and debt servicing expenses take up a sizable amount of revenue.

Strategic asset sales, according to Adeola, could aid in reducing the debt portfolio and future borrowing costs. He emphasized that the National Assembly needed clarification on whether the revenue estimates were solely for the federal government or for the federation.

The first to come under fire was Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, who defended the benchmark oil production of 1.84 million barrels per day as a “stretch target” intended to boost output.

“It is a stretch target so that authorities do not settle for lower output,” Edun stated.

“But as long as we do not spend what we do not have, we are within safe limits,” he continued.

He insisted that the 2026 plan had prioritized security spending and revealed that emergency funds had been made available for important military acquisitions, including those abroad.

We all agree that security should be given top priority,” Edun said. There is emergency funding available. At least twice this year, including yesterday, vital international payments for security equipment have been made.

Edun also stated that the high cost of debt for developing nations on global markets was the main cause of Nigeria’s debt problem, rather than the debt-to-GDP ratio.

He claims that high interest rates and debt sustainability are still the key issues at the G24 technical group conference that Nigeria is now chairing.

According to him, the economy was recovering, growing by roughly 4%, with better foreign reserves, more stable exchange rates, and less inflationary pressures.

The minister went on to say that an estimated $20 billion commitment by Shell, along with a resurgence of investor confidence, indicated strong momentum.

Dr. Zacch Adedeji, the chairman of the Nigeria Revenue Service (NRS), seemed to partially agree with lawmakers when he warned that erroneous revenue projections will unavoidably impair budget performance.

Budget efficiency is determined by what you can do, not by the size of the budget, Adedeji stated. We will cause ourselves issues if we plan with 100 naira when we only have 10 naira. Realistic assumptions must serve as the foundation.

Adedeji clarified that higher production costs have a major impact on net revenue to the federation and that, under the Petroleum Industry Act framework, taxes and royalties now account for a larger portion of government revenue from oil than gross crude sales.

He revealed that estimates suggested that, under the current arrangements, almost 47% of all oil company output was converted into government revenue. He urged lawmakers to examine cost structures and implement fiscal restraint.

Concerns regarding inadequate capital releases in prior budgets, including the 2024 and 2025 appropriations, which members claimed showed little implementation, were also brought up by the Senate.

In response, the committee received assurances from Dr. Doris Nkiruka Uzoka-Anite, Minister of State for Finance, that the remaining capital components of the 2024 and 2025 budgets will be fully implemented by March 31, 2026.

Ministries, Departments, and Agencies (MDAs) have been instructed to upload their cash plans to facilitate disbursement for 2025 projects, according to Uzoka-Anite, who also revealed that payments for 2024 capital projects were starting right away.

“The financial management system is operational again. MDAs need to finish their documentation requirements, but we are prepared to begin,” she stated.

Later on, the meeting transitioned into an almost two-hour closed-door meeting that was attended by Shamsedeen Babatunde Ogunjimi, the Federation’s accountant general, and Senator Atiku Bagudu, the minister of budget and economic planning.

At the conclusion of the discussion, the Senate indicated that the National Assembly might be forced to reduce the N58.472 trillion proposal in the interest of fiscal realism and sustainable economic management unless the government changed its assumptions and offered more solid income guarantees.

Sen. Mohammed Onawo, the chairman of the National Assembly Joint Committee on Culture, Art, and Creative Economy, stated that the legislature was ready to discuss with Tinubu, under the direction of the National Assembly, the necessity of providing a sizeable seed capital that would allow the ministry to function autonomously and become self-sustaining.

Onawo tasked the ministry with figuring exactly how much money it would need to operate without constantly relying on government grants.

“How much take-off grant would you need to become independent if the federal government decided to remove you from the national budget?” he said.

“You can’t begin with nothing. We will discuss anything we decide upon here with Mr. President and the Senate leadership.

After discussions, the committee put out a N1.5 trillion take-off funding package, claiming that the tourist and creative industries had vast unrealized potential that may revolutionize the nation’s economy.

Lawmakers insisted that the ministry might become one of the government’s biggest revenue-generating organizations with a sufficient capital infusion, clear policies, and institutional improvements.