There are moments in a country’s life when one figure suddenly becomes heavier than every headline around it. This time, it is ₦17.89 trillion, a borrowing target so large that it bends every conversation in Abuja toward itself. The Federal Government placed the number inside its 2026 Abridged Budget Call Circular, a document that quietly slid into public space in early December 2025. On the surface it looked like another technical update, one of those routine fiscal memos that rarely catch attention. But once analysts started tearing through the pages, the size of the proposed borrowing changed the entire tone of the conversation.
For context, the borrowing figure for 2025 was already high at ₦10.42 trillion. Nigeria has been on a tough financial path since 2021 when pandemic recovery, oil theft, subsidy removal pressures, and global inflation combined to weaken the country’s revenue performance. But the jump from ₦10.42 trillion to ₦17.89 trillion felt different. It symbolised a new point in the fiscal journey, a point where the country is no longer debating whether to borrow but how deeply to lean on loans just to keep the government machinery running.
Inside the same circular, a detail stood out even more. The plan was to raise about 80 percent of the loans from within the country. That is around ₦14.31 trillion from domestic sources. The remaining ₦3.58 trillion would be taken from foreign creditors. In the halls of policy meetings, this split has been discussed repeatedly. Domestic borrowing means the government will depend heavily on Nigerian banks, pension funds, bond markets and local investors. External borrowing means dealing with international lenders and bond issuers, who often tie loans to strict conditions.
By the time the budget numbers were fully reviewed, the picture became clearer. Nigeria’s 2026 total expenditure proposal was around ₦54.43 trillion. Out of that amount, debt service alone was placed at ₦15.91 trillion. Nearly one third of all planned spending. That means every time the government earns ten naira, a big slice is already tied to interest and repayment obligations.
This is the backdrop behind the dramatic rise in proposed loans for 2026. A deficit of more than ₦20 trillion sits at the centre of the fiscal plan. In realistic terms, the government simply does not have enough revenue to fund the budget without borrowing heavily. And this is where the debate becomes emotional for many Nigerians, because each loan taken today eventually returns as future pressure, future taxes, future spending adjustments.
The Strange Calm Around a Very Loud Number
A borrowing plan that nudges toward ₦18 trillion should spark panic. Yet, the tone in official circles has been surprisingly calm. The Ministry of Finance frames the plan as a cautious but realistic measure. The argument is straightforward. Revenue projections for 2026 are conservative. Oil prices are uncertain, even after the slight recovery that followed tightening supply measures by OPEC in mid 2025. Nigeria’s oil production has also been unstable. Pipeline disruptions in the Niger Delta continued into the second quarter of 2025, and the recovery has been slow despite government intervention.
Non oil revenue has improved since 2024 as the Federal Inland Revenue Service expanded its digital systems, but the improvement is not strong enough to close a deficit as wide as ₦20 trillion. So the government says borrowing is the only option unless the country chooses to cut essential spending, something that could trigger social and political backlash.
Outside the government environment, the calm disappears. Economists have repeatedly warned that Nigeria is running out of fiscal space. The debt service burden is rising faster than revenue. In 2023 and early 2024, public analysts became alarmed when debt service consumed almost the entire government revenue for several months. Even though figures have stabilised slightly by late 2025, the danger remains. If revenue slips again, Nigeria could find itself relying on fresh borrowing just to service existing borrowing. A loop with no exit.
This is why some analysts describe the situation as a debt spiral waiting to happen. A country that borrows because it cannot generate enough revenue, then borrows again because the debt service burden is too heavy, and eventually reaches a point where every economic crisis feels sharper.
Still, a counter argument exists. Nigeria is not alone in borrowing heavily to fund public spending. Many developing countries have embraced higher levels of debt since the pandemic years. The question is not whether a country borrows, but whether it borrows to fund productive and measurable development. This is the angle the government tries to emphasise whenever criticism rises. But at the moment, critics insist the country is borrowing too much just to keep the system running rather than building new capacity.
The Quiet Pressure Inside Nigeria’s Banks
When the call circular revealed that 80 percent of the borrowing would come from domestic sources, financial experts immediately began calculating what that means for private lending. Nigerian banks already hold large volumes of government securities. Treasury bills, bonds, and other instruments offer low risk and predictable returns. By contrast, lending to businesses carries more risk, especially in a country where inflation has climbed steadily and the cost of living crisis has made repayment more uncertain.
If the government takes up more space in the domestic lending market, banks could tighten lending to businesses. That means fewer loans for manufacturers, fewer loans for small businesses, fewer opportunities for private sector expansion. Banks may prefer to push their funds toward the government instead of the private economy. That is where the crowding out fear comes from.
The conversation around crowding out is not new in Nigeria. It appeared strongly in 2016 during the recession, but the numbers were smaller then. Now, with more than ₦14 trillion planned for domestic borrowing in a single year, the concern has returned with more force. Entrepreneurs are already dealing with high borrowing rates. If competition for funds increases because the government is taking more from the domestic pool, the cost of money could go even higher.
In simpler terms, the new borrowing plan could make it harder for an average business in Aba, Kano, Lagos or Port Harcourt to secure affordable credit. This is one of the reasons private sector groups are calling for more clarity on how the borrowed funds will be used. If the loans build infrastructure that supports business growth, the economy could benefit. But if the loans mainly cover recurrent expenses, the private sector might carry most of the pressure without receiving any direct benefit.
What Led Nigeria Here
Nigeria did not arrive at a ₦17.89 trillion borrowing plan overnight. It has been a gradual build up over years of underperformance in revenue, fluctuations in global oil prices, population growth pressures, subsidy removal adjustments, and a growing wage bill. The unusual mixture of reform and instability has defined the period between 2021 and 2025.
The 2022 and 2023 budgets struggled under the weight of fuel subsidy expenditure. Even after the subsidy was removed in May 2023, the transition period created its own economic difficulties, including inflationary spikes and pressure on foreign exchange reserves. By 2024, the government faced a tough reality. Revenue projections were failing consistently. Debt service obligations were rising. The local currency was under pressure. The country needed to either cut spending brutally or borrow heavily while building a stronger revenue base.
The government chose borrowing while implementing slow paced reforms. This choice created the environment for the 2025 and 2026 borrowing frameworks. What makes the 2026 figure striking is the fact that Nigeria’s expenditure has not risen sharply. The government is not drastically increasing spending. The problem is that revenue is not rising at the same pace. In fact, the 2026 revenue projection is lower than what was estimated for 2025. A drop in revenue with almost stable expenditure automatically widens the deficit.
The government also rolled over about 70 percent of 2025 capital allocations to 2026. This means fewer new capital projects will enter the 2026 budget. The pattern reflects the financial stress across ministries. Projects started in 2025 cannot be abandoned, but there is not enough space to start too many new ones. This is the strongest evidence that the government is borrowing for stability rather than massive development.
The Risks That Could Break the Plan
Several risks stand between the borrowing strategy and the government’s hope of stability. One major risk is oil. Nigeria’s oil revenue is sensitive to both price and production. If global oil prices fall or if oil production dips, revenue could collapse. That would widen the deficit beyond current projections.
Another risk is inflation. If borrowing pushes interest rates higher and inflation continues to rise, the cost of domestic borrowing could increase. That would place more pressure on debt service.
Non oil revenue performance is also uncertain. Tax reforms take time to show results. The government needs efficient systems, compliance incentives and strong enforcement. If any part of this chain fails, non oil revenue may not grow enough to support the budget.
External borrowing conditions could also change. If global interest rates rise, foreign loans may become more expensive. Nigeria’s credit rating will influence how international markets respond to the borrowing plan. A downgrade would make borrowing abroad more difficult and more costly.
Mismanagement is another concern. For borrowing to support development, the money must be used efficiently. If waste and corruption interfere, the economic impact could weaken.
Final Thoughts: The Narrow Road Ahead
By the time Nigeria enters the 2026 fiscal year in January, the borrowing plan will already be a major part of public conversation. Many citizens see it as a sign that the country is trapped in a cycle of debt. Others see it as a necessary path while the government rebuilds its revenue base.
Whichever view one holds, the country faces a narrow road ahead. Nigeria needs to grow its economy fast enough to support debt service without weakening development spending. It needs to strengthen non oil revenue. It needs stable oil production. It needs foreign investment. It needs responsible management of borrowed funds.
The ₦17.89 trillion borrowing plan will not determine Nigeria’s destiny alone. But it will shape the fiscal and economic tone of 2026. It will influence how businesses borrow, how families cope with prices, how ministries plan their projects and how investors measure Nigeria’s risk.
This is the weight of the number that started as a simple line in an official circular. It is now the biggest test of Nigeria’s fiscal strategy in recent years. Whether it becomes a debt spiral or a temporary survival bridge depends on choices made in the months ahead. Choices that require discipline, clarity and an honest understanding of how fragile the present moment truly is.
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