The Senate has issued a warning that it might need to lower the N58.472 trillion 2026 budget, attributing this to increasing debt and inadequate capital project execution.
This caution was expressed during a challenging interaction between the Senate Committee on Appropriations and the federal government's economic delegation, during which legislators scrutinized the validity of essential assumptions behind the ambitious budget proposal.
In a related budget defense meeting held earlier, the National Assembly suggested an initial grant of N1.5 trillion for the Federal Ministry of Art, Culture, Tourism and the Creative Economy (FMACTCE) to reposition this sector as a significant contributor to economic diversification and reduce reliance on oil revenues.
This proposal was presented during the ministry’s 2025 budget hearing before the Joint Committee on Culture, Art, and Creative Economy. Lawmakers displayed strong belief in the sector’s potential to generate substantial revenue, create jobs, and earn foreign currency if effectively budgeted and funded.
In her address, Minister of Art, Culture, Tourism, and the Creative Economy, Hannatu Musa Musawa, estimated that the sector could yield $100 billion towards Nigeria’s GDP and create over 2.5 million jobs by the year 2030.
Senator Solomon Adeola, chair of the Senate Committee on Appropriations, questioned the validity of the key assumptions in the federal government's 2026 budget proposal, emphasizing that the budget document originates from the executive branch and thus must reflect plausible and actionable forecasts.
Adeola voiced concern about a consistent discrepancy between anticipated and realized oil revenues, referencing performances of only 18% in one fiscal year and 36.5% in another—numbers that significantly fall short of projections.
“How can we rationalize this poor level of performance?” Adeola queried.
He further stated, “Should we reduce this N58.472 trillion budget or go ahead and make modifications? If we choose not to cut it down, it suggests you are assuring Nigerians you will achieve these targets.”
He cautioned that with Nigeria’s debt level nearing N152 trillion, along with substantial debt servicing costs consuming a large portion of revenues, the legislature would not endorse forecasts that could exacerbate fiscal challenges.
Adeola recommended that strategic asset sales could alleviate the debt burden and lower future borrowing costs. He insisted that the National Assembly needed clarity on whether the revenue projections were for the entire federation or specifically for the federal government.
First up for examination was the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, who supported the oil production target of 1.84 million barrels per day as a “stretch target,” aimed at boosting performance.
Edun stated, “It is a stretch target to prevent authorities from settling for lower output.”
Moreover, he commented, “As long as we do not allocate funds we do not have, we remain within safe limits.”
He highlighted that security expenditures had been prioritized within the 2026 proposal, confirming that emergency funds had been issued for crucial military procurements, including international acquisitions.
Edun pointed out, “We collectively agree that security must be a priority. Emergency funding has been allocated. Critical international payments for security equipment have been completed multiple times this year, including as recently as Thursday.”
He also mentioned that Nigeria's debt predicament is less about the debt-to- GDP ratio and more concerning the high costs of borrowing for developing nations in global markets.
According to Edun, Nigeria currently leads a technical group meeting within the G24, focusing on sustainable debt and prevailing interest rates as central issues.
He claimed that the economy is displaying signs of recovery, with a growth rate near four percent, alleviating inflationary pressures, improved foreign currency reserves, and enhanced exchange rate stability.
The minister noted that renewed investor confidence was indicated by a reported $20 billion commitment from Shell, reflecting positive development.
Dr. Zacch Adedeji, Chairman of the Nigeria Revenue Service (NRS), appeared to partially concur with legislators, cautioning that unrealistic revenue estimates ultimately diminish budget performance.
Adedeji remarked, “Budget efficiency is not dictated by the size of the budget; it is determined by what can be actualized. Planning for 100 naira when we only have 10 naira will lead to issues. We must begin with sensible assumptions.”
He also explained that revenue from oil now largely derives from taxes and royalties rather than gross crude sales under the Petroleum Industry Act framework, asserting that elevated production costs adversely affect net government revenue.
He indicated that approximately 47% of total oil company output translates into government earnings under the current setup and urged lawmakers to examine cost structures more critically and enforce fiscal discipline.
The Senate revisited issues related to insufficient capital allocations in previous budgets, particularly for the 2024 and 2025 appropriations, which lawmakers noted had minimal execution rates.
In response, Minister of State for Finance, Dr. Doris Nkiruka Uzoka-Anite assured the committee that remaining capital expenditures from the 2024 and 2025 budgets would be fully implemented by March 31, 2026.
Uzoka-Anite announced that disbursements for 2024 capital projects would commence immediately and that Ministries, Departments, and Agencies (MDAs) had been directed to upload their cash plans to expedite funding for 2025 projects.
“The financial management system is operational again. We stand ready to initiate this, but MDAs must finalize their documentation requirements,” she remarked.
The discussions later shifted into a closed session lasting nearly two hours, with attendance from Minister of Budget and Economic Planning, Senator Atiku Bagudu, and the Accountant-General of the Federation, Shamsedeen Babatunde Ogunjimi.
By the end of the session, the Senate indicated that unless the executive reviewed its assumptions and offered more reliable revenue assurances, the National Assembly might have to consider reducing the N58.472 trillion proposal to ensure fiscal responsibility and sustainable economic governance.
Meanwhile, Senator Mohammed Onawo, the Chairman of the National Assembly Joint Committee on Culture, Art, and Creative Economy, stated that the legislature was ready to engage with President Tinubu and National Assembly leadership regarding the need to provide significant seed capital that would enable the ministry to operate independently and achieve self-sufficiency.
Onawo urged the ministry to determine the funding level required to function independently of federal allocations.
He inquired, “If the federal government decides to remove you from the national budget, what amount of grant would you require to achieve independence?”
“You cannot commence with nothing. Whatever agreement we reach here, we will present to the Senate leadership and the President,” he added.
After discussions, the committee proposed a N1.5 trillion initial funding package, asserting that both the creative and tourism sectors hold immense untapped potential that could reshape Nigeria’s economic landscape.
Lawmakers asserted that with sufficient capital investment, clear policy objectives, and necessary institutional reforms, the ministry could evolve into one of the biggest revenue-generating agencies in the government.
Comments (0)
You must be logged in to comment.
Be the first to comment on this article!