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MTEF/FSP: Fed Govt eyes aggressive revenue drive, savings to curtail N152tr debt
• Nigeria records N30tr revenue shortfall for 2025
• As Senate panel urges FIRS to intensify public enlightenment on new tax reform laws
The Federal Government has announced a decisive shift away from heavy borrowing towards aggressive revenue mobilisation, as Nigeria’s public debt stock rises to about N152 trillion.
This is even as the Chairman, Senate Committee on Finance, Sen Mohammed Sani Musa, advised the Federal Inland Revenue Service (FIRS) to embark on aggressive nationwide enlightenment to prepare Nigerians for the new tax reform laws scheduled to take effect next year, warning that poor public understanding could undermine the gains of the far-reaching reforms.
Presenting the 2026 – 2028 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), before the Senate Committee on Finance, the Minister of Finance and Coordinating Minister for the Economy, Dr Olawale Edun, said the focus of government policy going forward would be on strengthening revenue generation rather than accumulating new debt.
Edun further disclosed that the country recorded N30trillion revenue shortfall in the outgoing year.
According to him, out of the N40trillion revenue target for 2025, only the sum of N10trillion was realised.
“The focus of the Medium-Term Expenditure Framework is not on increased borrowing. The emphasis is squarely on revenue generation,” the minister told lawmakers.
He said the MTEF, which is a statutory requirement under the Fiscal Responsibility Act, sets out the government’s fiscal direction over a three-year period and reflects the realities confronting public finance.
On budget performance, the minister said the 2024 budget had been largely implemented, with both recurrent and capital components substantially executed.
He explained that the capital component of the 2024 budget was extended into 2025, with funding fully available for the finalised capital projects up to September.
“Funding is available for part of the remaining capital expenditure, while the balance is planned to be rolled over into the 2026 budget,” he said.
On the 2025 budget, he disclosed that funding arrangements and approvals had been secured, with about 30 per cent of the capital budget already funded.
According to him, the balance would also be rolled over into 2026, subject to the cooperation and approval of the National Assembly.
The minister admitted that weak revenue performance remains the biggest challenge to effective budget implementation. He said total revenue for 2024 was projected at about N25.9 trillion, but actual federal government revenue stood at roughly N8.27 trillion.
“The reality is that revenue performance has consistently fallen short of budget estimates,” he said, adding that treasury management measures and financial engineering had been deployed to bridge the gap.
For 2025, he said revenue was estimated at about N40 trillion, but actual Federal Government cash revenue is projected at about N10 trillion, a gap he described as unsustainable.
“This historical trend clearly shows the need for a far more robust and realistic revenue effort going into 2026,” the minister said.
To address the challenge, he said the government is rolling out a comprehensive revenue optimisation programme anchored on automation, digitalisation, technology deployment and process re-engineering.
As part of the reforms, he disclosed that four circulars had been issued mandating revenue- and investment-generating ministries, departments and agencies to migrate to a transparent digital platform.
“They must stop collecting revenue in cash and must also stop deducting expenses or charges before remitting revenues to the Treasury Single Account,” he said.
The minister stressed that the reform would be a major pillar of the 2026 budget, noting that revenue projections in recent years had significantly exceeded actual collections.
Despite the revenue shortfalls, he said the government has continued to meet its key obligations.
“Even with revenue performance of about 25 per cent in some instances, salaries, pensions, statutory transfers and debt service—both domestic and foreign—have all been fully paid,” he said.
Explaining the surge in public debt, the minister said Nigeria’s total public debt rose from about N70 trillion in 2023 to approximately N152 trillion, largely due to transparency-driven adjustments rather than fresh borrowing.
“A significant portion of this increase—about N30 trillion—arose from bringing previously unrecorded Ways and Means financing onto the government’s books,” he said.
He added that about N50 trillion resulted from exchange-rate adjustments following Central Bank monetary policy actions to clear foreign exchange backlogs and rebuild external reserves.
“Consequently, about N80 trillion of the total debt stock does not represent new borrowing, but rather reclassification, regularisation and valuation adjustments,” the minister said.
He emphasised that the government is now looking beyond borrowing to mobilise domestic savings to drive growth.
“For an economy where about 90 per cent of activity is driven by the private sector, there must be broad-based mobilisation of savings,” he said.
According to him, President Bola Tinubu is considering a public-private partnership initiative aimed at mobilising mass savings across the population.
“This will go beyond the relatively small number of Nigerians with pension or stockbroking accounts and encourage tens of millions of citizens to save and invest productively in the economy,” he said.
He urged lawmakers to support the proposed reforms, saying they are critical to restoring fiscal sustainability and strengthening the economy.
The Minister of Budget and Economic Planning, Sen Atiku Bagudu and Minister of State (Petroleum), Sen Heineken Lokpobiri in their submissions, defended the parameters set for the proposed N54. 4trillion 2026 budget.
The parameters are 1.84million oil production per day, $64.85 oil price benchmark, N1, 512.00 to 1USD as exchange rate etc.
Speaking at the interactive session with key revenue-generating agencies, ministries and departments, the committee chairman, Sani Musa, said the scope and implications of the new tax architecture being finalised by the National Assembly were extensive and would significantly alter Nigeria’s tax administration, incentives regime and revenue profile.
According to him, Nigerians must be adequately informed ahead of January 1, when several of the reforms are expected to commence, to avoid confusion, misinformation and resistance.
He stressed that FIRS, as the lead agency in tax administration, has a responsibility to clearly explain the benefits and obligations embedded in the new laws.
“With the kind of reforms that are coming, there will be serious issues if Nigerians are not properly enlightened.
“There is a strong need for FIRS, working with the Ministry of Finance and other relevant agencies, to step up public communication so citizens understand what these reforms mean for them and for the economy,” Musa said.
As part of the enlightenment drive, the lawmaker specifically called on FIRS to utilise national media platforms to clarify contentious issues around memoranda of understanding, incentives and compliance requirements, noting that he had received numerous complaints and enquiries from the public on such matters.
“The reforms are intended to strengthen tax administration and management, not to punish Nigerians. That message must be clearly communicated,” he said, while commending the participation of ministers, heads of agencies and stakeholders at the session.
The lawmaker noted that the National Assembly is pushing for a consolidated tax framework that simplifies compliance, removes duplication of charges and harmonises incentives, particularly to support investment, exports and revenue growth.
He explained that under the proposed tax regime, incentives would be streamlined into a single, development-focused framework rather than multiple, overlapping concessions that often result in revenue leakages.
He also highlighted ongoing reforms in Nigeria’s special economic and free trade zones, explaining that only 25 per cent of goods produced in the zones would be allowed into the Nigerian customs territory duty-free, while the rest would attract applicable taxes and duties.
He said the measure was designed to boost government revenue while ensuring that the zones truly serve as export hubs rather than channels for tax avoidance.
“We have realised that a lot of revenue has been missed over the years. These reforms are meant to close those gaps while still supporting investors to use Nigeria as a base to export across Africa under the African Continental Free Trade Area and to the rest of the world,” he added.
The committee chairman further disclosed that the Senate would, immediately after the Christmas recess, conduct investigative hearings to assess the actual budget performance of ministries, departments and government-owned enterprises, particularly in the area of revenue generation.
He said the outcome would inform an amortised fiscal strategy paper aimed at producing a more realistic and implementable national budget.
He urged revenue agencies and government-owned enterprises to align their projections with the realities of the new tax laws, stressing that the legislature would demand stronger revenue outcomes in the coming fiscal years.
The Committee expressed displeasure with multiple budgets implementation in a fiscal year by the federal government as experienced in 2025.
It consequently tasked the Federal Inland Revenue Service (FIRS), to increase its projected revenue target for 2026 from N31trillion to N35trillion.
He added that a three man adhoc committee would be set up by the committee to liaise with the Minister and the Accountant-General of the Federation on payment of local contractors for projects executed in 2024 before expiration of the budget on 31st of this month.
For FIRS, Sen Musa tasked its Chairman, Zacch Adedeji, to work towards realizing N35trillion as target revenue for 2026 fiscal year and not the earlier projected N31trillion mentioned by the Chairman.
The FIRS boss had in making the projection said the agency under him, realised N20.2trillion revenue in 2024 and N25.2trillion in 2025.
He however said that the huge revenue being realized by FIRS and other agencies like Customs, are being swallowed and made insufficient by multiple budget implementations in a fiscal year.
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