Dare Babalola
Nigeria’s recently unveiled 2026-2028 Medium-Term Expenditure Framework (MTEF) marks a commendable shift toward more conservative and realistic fiscal planning, according to Muda Yusuf, Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE).
The framework, presented by Minister of Budget and National Planning Senator Abubakar Atiku Bagudu, acknowledges the country’s challenging fiscal landscape amid global uncertainties and domestic pressures.
The MTEF is seen as a response to heightened global uncertainties, Nigeria’s domestic fiscal pressures, recurring missed revenue targets, and the longstanding challenges around oil production and oil-price volatility, CPPE noted in a policy brief released on Sunday.
One of the major improvements highlighted by CPPE is the adoption of dual oil production parameters, a technical target of 2.06 million barrels per day (mbpd) and a more cautious benchmark of 1.80 mbpd for budgeting purposes.
This reflects an acknowledgment of chronic underproduction due to vandalism, theft, and operational issues.
“Using 1.80 mbpd as the revenue basis is significantly more prudent than the 2.06 mbpd used in the 2025 budget,” Yusuf said.
CPPE, however, suggested an even more conservative benchmark of 1.6 mbpd to bolster fiscal resilience against unpredictable production challenges, given Nigeria’s historical trends.
On oil prices, the MTEF sets a benchmark of $64.85 per barrel for 2026, a reduction from $75 in the 2025 budget. While seen as a cautious approach, CPPE argued this remains somewhat optimistic compared to global forecasts.
Agencies like the U.S. Energy Information Administration project $55/barrel, Goldman Sachs says $56, and the World Bank estimates $60, according to Yusuf. “Aligning Nigeria’s benchmark closer to $60/barrel would strengthen the MTEF’s resilience,” he added.
The exchange rate assumption of ₦1,540/$ in the MTEF reflects anticipated liquidity pressures from the 2026 election cycle and macroeconomic dynamics, providing a realistic basis for planning FX-linked projects and import costs.
“Although a weaker naira increases project costs, it simultaneously boosts naira-denominated revenues. This benchmark provides a credible basis for fiscal planning,” the CPPE CEO stated.
For GDP growth, the MTEF projects 4.68% for 2026, a figure CPPE considers aspirational but not materially distortive to planning. More critical is the revenue projection of ₦34.33 trillion—a 16% reduction from 2025’s ₦36.35 trillion, signaling improved fiscal prudence.
“The downward adjustment is a welcome sign of improved fiscal prudence,” Yusuf said, emphasising the need for sustained efforts to broaden revenue sources beyond oil.
However, debt sustainability remains a pressing concern. The MTEF allocates ₦15.91 trillion to debt service in 2026, equivalent to 46% of projected revenue, severely limiting space for infrastructure, social spending, and security.
“Nigeria’s rising debt trajectory underscores the urgent need for a renewed focus on debt sustainability, stronger domestic revenue mobilisation, and greater efficiency in public expenditure,” Yusuf stressed.
CPPE also flagged the delayed presentation of the MTEF, which contravenes the Fiscal Responsibility Act’s mandate to submit it to the National Assembly four months before the fiscal year.
“Timely submission is crucial for informed legislative scrutiny and smooth budget preparation,” Yusuf urged.
The National Assembly, CPPE advised, must play a guardian role by resisting pressures to inflate expenditure estimates without credible revenue backing.
“Budget credibility depends not only on Executive proposals but also on the Legislature’s commitment to evidence-based decision-making,” he said.
While praising the progress, Yusuf noted the shift doesn’t go far enough.
“For Nigeria’s budget process to evolve into a truly effective governance tool, both the Executive and Legislature must uphold realistic assumptions, transparency, and discipline in spending,” he emphasized.
The CPPE CEO called for aligning assumptions more closely with realities to rebuild public confidence and entrench macroeconomic stability.
“If sustained, these reforms will enhance the credibility of the budget process,” he added.
The 2026-2028 MTEF comes amid Nigeria’s struggles with revenue underperformance, which has often led to gaps between appropriations and implementation. CPPE sees this as an opportunity to recalibrate priorities.
“The unrealistic assumptions of the 2025 budget were particularly damaging, contributing to implementation shortfalls,” Yusuf remarked, highlighting the importance of the current shift.
On the international front, global economic headwinds and oil market volatility make Nigeria’s cautious approach timely, CPPE noted, urging policymakers to stay vigilant.
CPPE reiterated support for efforts to improve tax administration and non-oil revenue, critical for reducing dependence on volatile oil income.
“Improved implementation efficiency and cost-effectiveness in public expenditure are non-negotiable,” Yusuf said, calling for accountability in spending.
As Nigeria navigates pre-election spending pressures in 2026, CPPE stressed the need for strict fiscal discipline to avoid derailing progress.
In conclusion, Yusuf stated, “The 2026–2028 MTEF is a positive step. But sustained commitment to realism, transparency, and efficiency will determine if it becomes more than an annual formality.”
