A new International Monetary Fund (IMF) report released yesterday warned that weak budget credibility is undermining macroeconomic stability across sub-Saharan Africa, eroding public trust and weakening long-term development outcomes.

The IMF warning comes on the heels of rising concerns over Nigeria’s persistent cycle of opaque budget administration, spurious benchmark, overlapping execution and revenue shortfalls, challenges that seek to undermine budgeting as a fiscal control tool.

At the federal level, the culture of budgeting as it was known is dying, giving way to unappropriated spending, multiple budget execution, undefined budgeting cycle, among others.

For one, the 2026 appropriation was only signed into law on April 17, over three months into a new fiscal year and over two into its supposed implementation.

A statement by the President’s spokesperson, Bayo Onanuga, shortly after the budget was signed, said the spending guide had taken effect on April 1, raising questions on whether its implementation had commenced before the President’s signature – a necessary aspect of the lawmaking process.

The budget was passed by the two chambers of the National Assembly after the members hurriedly approved the add-on sent by President Bola Tinubu.

At the signing of the appropriation, the National Assembly extended the implementation of the capital component of the 2025 appropriation to June 30, 2026 – a strange fiscal practice invoked recently to manage the public uproar over weak capital budget performance, but which has grown into a budget governance culture.

The decision validated the press’ worries over government’s poor commitment to ending overlapping budget implementation. At the twilight of last year, Tinubu wrote to the parliament requesting the “re-enactment” of a harmonised 2024/2025 appropriation as part of the groundwork to end the history of overlapping budget implementation, which started in 2022 under the late President Muhammadu Buhari.

Since then, budget rollover has become a routine fiscal pathway, though capital expenditure performances have been kneecapped by poor revenue mobilisation to less than 70 per cent. When Tinubu promised the lawmakers an end to multiple budgeting, many analysts, who baulked at his commitment, have been justified by the handling of the 2025 public spending document.

And close to a month after the 2026 budget was signed into law, there is no official confirmation beyond Onanuga’s statement on whether its execution, at least the recurrent component, has commenced.

The IMF report, titled ‘Budget Credibility in Sub-Saharan Africa’, paints a troubling picture of how governments across the region routinely depart from approved fiscal plans, with deficits exceeding projections, current expenditures overshooting limits and capital projects repeatedly abandoned or implementation delayed midway.

The 2024 budget performance was the last of such reports. Then, the government projected a fiscal deficit of N9.17 trillion, which was overrun by N4.34 trillion or 47 per cent. Recent years mirror similar variance in fiscal deficit projection and actual deficit, a crisis fuelled by revenue underperformance or recurrent projection overrun or both.

Many African countries lack commercially viable frameworks that drive public-private partnership (PPP) elsewhere, thus making equity funding a key driver of public infrastructure delivery. With Nigeria’s yearly infrastructure estimated at $300 million by Moody’s in the face of a tattered PPP model, there are not many options for equity infrastructure spending.

The IMF paper studied 39 African countries between 2021 and 2024, with Nigeria featuring prominently in the institutional assessment and exemplifying many of the structural weaknesses highlighted in the report: optimistic revenue assumptions, weak expenditure discipline, fragmented fiscal management systems, poor transparency and recurrent reliance on supplementary or revised budgets that alter the original fiscal framework within months of legislative approval.

The treatment of the 2026 budget speaks expressly about the low attention African countries accord to the transparency canon. Almost a month after the budget was signed, the revised version has yet to be made public, which raises concerns about the government’s commitment to transparency.

The current administration has been accused of failing in fiscal transparency tests. Borrowed funds are spent without clearly articulated justifications. Budget implementation reports (BIRs), which were previously updated quarterly, are now delayed for as much as a year. Close to mid-year, the 2025 full-year BIR is yet to be made public; only the half-year is accessible.

Recently, the Guardian reported that the FG’s yearly audited financial statement was last transmitted to the National Assembly in 2023, a breach of a provision of the Fiscal Responsibility Act (FRA), a fiscal discipline document that has been abused on all fronts.
For the IMF report, Nigeria, Africa’s once largest economy, is grappling with elevated debt servicing costs, chronic revenue underperformance, ballooning recurrent expenditures, heavy dependence on borrowing, widening infrastructure deficit, as well as rising social spending demand amid a fragile macroeconomic environment.

The exit of Edun
The IMF warned that when governments consistently fail to deliver budgets as approved, fiscal policy loses credibility, investor confidence weakens, and economic uncertainty intensifies.

“Budgets are more than technical documents. They reflect the core policy commitments of a government: setting priorities, allocating scarce resources and signalling the fiscal stance. When these commitments are repeatedly missed, fiscal discipline weakens and macroeconomic uncertainty rises,” the report said.

Fiscal estimates, reality and outlook
The Federal Government’s revised 2026 budget, estimated at N68.32 trillion, was built on crude oil production of 1.84 million barrels per day (mbpd), an oil benchmark price of $75 per barrel and an exchange rate of N1,400/$1, an overshoot of the current dollar-naira exchange value.

Last month, the country’s average production was 1.49mbpd, about 20 per cent short of the target and the highest since the beginning of the year. Shortfalls over the years have been fuelled by pipeline vandalism, oil theft and operational disruptions, divestment by international oil companies (IOC) and poor fresh investment – challenges the government is yet to find solutions to.

Following an upward revision of the budget, Nigeria’s 2026 fiscal deficit is projected at N29.2 trillion, while debt servicing alone is expected to consume over 20 per cent of the entire expenditure.

The IMF paper warned that poor budgeting could weaken not only fiscal planning but also governance and accountability structures.

“Credible budgets enable stronger accountability and reinforce the social contract by aligning the government’s stated objectives with its actions,” the report stated.

Nigeria’s recurring budget credibility problems have become more visible over the past decade as fiscal pressures intensified. Large fiscal deficits financed by borrowing, accompanied by weak revenue mobilisation, volatile oil earnings and rising debt service obligations.

Across sub-Saharan Africa, the IMF noted, fiscal deficits consistently exceed approved budget levels because governments tend to overestimate revenues while underestimating spending pressures, a pattern that closely reflects Nigeria’s experience.

Successive Nigerian budgets have repeatedly projected aggressive revenue growth based on overtly optimistic assumptions around crude oil production, exchange rates, tax proceeds and economic growth. Yet actuals often fall below projections.

The IMF found that current expenditures, including wages, transfers and operational spending, consistently exceeded budget ceilings across the region and were the single biggest contributor to fiscal overruns.

The report identified primary current expenditure overruns, rather than interest payments alone, as the major source of budget deviations.

The IMF warned that in many African countries, governments resort to cutting or postponing capital projects whenever revenues disappoint or financing conditions tighten.

The consequences, the report noted, include unfinished roads, delayed infrastructure projects, weak healthcare delivery and underfunded education systems. It warned that this approach ultimately weakens long-term growth and development prospects.

The IMF paper also highlighted how weak expenditure controls and pro-cyclical fiscal behaviour worsen budget credibility problems.

It warned that fragmented cash management systems and weak oversight structures significantly undermine budget credibility across the region.

The report further stressed that weak digitalisation, poor data exchange systems and limited access to timely fiscal information undermine accountability across many African countries.

— Urges States to Adopt Fiscal Discipline

By Son Tertsea, Abuja

Even as more funds accrue to sub national governments for development, their reckless fiscal behaviour has intensified via excessive supplementary Budgets, unplanned spending, and unsustainable debt accumulation, prompting the Central Bank of Nigeria CBN to call them to order.

The CBN said this on Sunday through a statement following an engagement with sub-national stakeholders facilitated through the Nigerian Governors’ Forum Secretariat in Abuja.

According to the statement, the Deputy Governor in charge of the Economic Policy Directorate, Dr Muhammad Abdullahi, urged state governments to adopt stricter fiscal discipline to support price stability and ongoing macroeconomic reforms.

He urged “States to reduce reliance on overdrafts and short-term financing, ensure that borrowing decisions align with debt sustainability thresholds, improve budget realism and revenue forecasting, prioritise expenditure, and better synchronise fiscal calendars with prevailing macroeconomic conditions,” the statement said.

Abdullahi described the transition to inflation targeting as a shift towards a more transparent, rule-based, and forward-looking monetary framework that requires close collaboration between the central bank and state authorities.

According to him, while the CBN remains responsible for monetary policy decisions aimed at controlling inflation, fiscal actions by state governments also significantly influence inflation outcomes in a federal system like Nigeria’s.

He warned that inflation targeting largely depends on managing economic expectations, stressing that expansionary fiscal activities by states could weaken the effectiveness of monetary policy signals.

The deputy governor noted that, “In an inflation targeting regime, persistent, unpredictable or expansionary fiscal behaviour at the sub-national level can significantly undermine price stability,”

He added that the absence of fiscal dominance, where governments pressure the central bank to monetise deficits, remains a major condition for successful inflation targeting, noting that the principle applies to both federal and state governments.

Abdullahi further
outlined four responsibilities expected of state governments under the inflation-targeting framework, including maintaining fiscal discipline and predictability, pursuing responsible borrowing, improving coordination on cash and debt management, and strengthening internally generated revenue mobilisation.

He warned that excessive supplementary budgets, unplanned spending, and unsustainable debt accumulation could trigger liquidity shocks and worsen inflationary pressures.

The deputy governor stressed that inflation targeting should be seen as a collective national commitment aimed at achieving long-term stability, economic credibility, and sustainable growth.

In his submission, the Director of the Monetary Policy Department, Dr Victor Oboh, said inflation targeting is a “win-win framework” capable of benefiting households, businesses, and governments by improving policy credibility and reducing macroeconomic uncertainty.

Oboh noted further that price stability could not be achieved through monetary policy alone, especially in a federal system where state spending, borrowing, and cash flow decisions directly affect inflation and liquidity conditions.

According to him, the engagement was organised to deepen collaboration and mutual understanding between the CBN and state governments regarding the expectations and coordination required for the successful implementation of inflation targeting.

In his goodwill messsge on behalf of the Director-General of the Nigerian Governors’ Forum, Dr Abdullateef Shittu, the Executive Director of Policy, Strategy and Research at the forum, Prof Olalekan Yunusa, commended the CBN for involving sub-national authorities early in the transition process.

He said the move from monetary targeting to inflation targeting reflected a deliberate commitment to price stability, adding that sustainable macroeconomic stability required disciplined coordination across all tiers of government.

The engagement attracted participants from over 20 states, including commissioners of finance and economic planning, accountants-general, permanent secretaries, statisticians-general, and directors, who reaffirmed support for the CBN’s reform agenda and transition to inflation targeting.

Reports indicate that the 36 states and the Federal Capital Territory’s debt rose to nearly $5.7bn in fresh external loans in 2025, driving a year-on-year surge in subnational foreign debt despite higher inflows from Federation Account Allocation Committee disbursements.
Data from the Debt Management Office indicated that the combined external debt stock of the 36 states and the FCT increased from $4.80bn as of December 31, 2024, to $5.68bn as of December 31, 2025, reflecting a net increase of $884.66m, or 18.43 per cent year-on-year.
A breakdown of the data showed that 33 out of the 37 subnational entities recorded increases in their external debt positions during the period under review, representing 89.19 per cent of the total, while only four states posted declines, accounting for 10.81 per cent.
The scale of the increase shows a continued reliance on external financing by state governments amid fiscal pressures, infrastructure demands, and rising FAAC revenues.

The House of Representatives has constituted an ad-hoc committee to investigate debts owed to the Federal Government by Ministries, Departments and Agencies (MDAs), private organisations and other state actors.

The committee led by Hon. Oluwole Oke was appointed following the adoption of a motion sponsored by Hon. Salisu Yusuf and five other lawmakers during plenary.

The House mandated the panel to undertake a comprehensive review of outstanding liabilities owed to the Federal Government, identify all debtors, assess recovery efforts by relevant agencies and recommend practical measures for the recovery of funds.

Earlier, Yusuf raised concern over Nigeria’s growing debt burden and weakening revenue base, warning that the failure to recover monies owed to government was worsening the country’s fiscal pressures.

He disclosed that Nigeria’s total public debt stood at N153.29 trillion as of September 30, 2025, attributing the rise to increased domestic borrowing and continued pressure from currency depreciation.

According to him, domestic debt accounts for more than 53 per cent of the total debt stock, while external debt makes up about 47 per cent, with debt servicing consuming nearly 47.85 per cent of government revenue within the first nine months of 2025.

Yusuf noted that like many countries, Nigeria had adopted borrowing and other fiscal measures in the aftermath of the COVID-19 pandemic to stabilise the economy.

“Most countries around the world, including Nigeria, had recourse to borrowing and other monetary policy tools to address economic challenges,” he said.

He added that while some of these measures had contributed to relative macroeconomic stability, including improvements in currency performance, greater attention was still needed on revenue recovery.

The lawmaker expressed concern that successive governments had focused more on borrowing and debt servicing, while leaving substantial sums owed to the Federal Government uncollected.

“The Federal Government of Nigeria is owed huge sums of money within and outside the country, including judgment debts,” Yusuf said.

“These funds are held by state and non-state actors, as well as Ministries, Departments and Agencies of government.”

He further recalled the establishment of the Presidential Initiative on Continuous Audit in 2015, designed to strengthen financial oversight and improve accountability in public expenditure.

According to him, the initiative was aimed at enhancing efficiency in revenue management and ensuring proper monitoring of government finances.

Yusuf warned that the continued failure to recover outstanding debts was placing additional strain on public finances and contributing to Nigeria’s fiscal challenges at a time of rising expenditure demands and infrastructure gaps.

Following the adoption of the motion, the House directed the Oke-led committee to submit its findings within four weeks for further legislative action.

The development comes amid growing concerns over Nigeria’s debt sustainability, with rising calls for the Federal Government to prioritise revenue recovery as a means of reducing fiscal pressure without increasing the tax burden on citizens already facing inflation and high living costs.