The Nigerian Senate has reduced the oil price benchmark for the 2026 fiscal year from $64.80 to $60 per barrel in the proposed ₦54.46 trillion Federal Government budget framework, while maintaining all other macroeconomic and fiscal assumptions outlined in the 2026–2028 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
The adjustment, approved on Tuesday, December 16, 2025, followed recommendations from the Senate Committee on Finance, as presented by its Chairman, Senator Sani Musa (Niger East). Musa explained that the downward revision reflects current global realities, including geopolitical tensions in Europe and the Middle East and their impact on crude oil prices. The committee described the conservative benchmark as necessary given the volatility of international oil markets.
The Senate also endorsed revised oil price projections for subsequent years, raising the 2027 benchmark from $64.30 to $65 per barrel and the 2028 forecast from $65.50 to $70 per barrel. Domestic crude production projections were retained at 1.84 million barrels per day for 2026, rising to 1.88 million in 2027 and 1.92 million in 2028.
Macroeconomic Assumptions and Growth
The upper chamber approved exchange rate projections of ₦1,512 to the dollar in 2026, ₦1,432.15 in 2027, and ₦1,383.18 in 2028, reflecting alignment with the Central Bank of Nigeria’s policy to stabilise the naira through coordinated fiscal and monetary measures. Inflation is projected to ease gradually, from 16.5% in 2026 to 13% in 2027 and 9% in 2028.
Real GDP growth estimates remain at 4.68% for 2026, 5.96% in 2027, and 7.9% in 2028, supported by ongoing economic reforms and anticipated benefits from recently enacted tax laws. The committee highlighted the critical role of implementing new Tax Acts and recommended a National Scanning Policy under the Nigeria Revenue Service’s Single Window system to enhance revenue collection, improve trade facilitation, reduce leakages, and strengthen national security.
Budget Size and Borrowing
The 2026 budget framework sets total expenditure at ₦54.46 trillion, with retained revenue of ₦34.33 trillion and new borrowing pegged at ₦17.88 trillion, covering both domestic and foreign sources. Debt service obligations are projected at ₦15.52 trillion, while pensions, gratuities, and retirees’ benefits are allocated ₦1.376 trillion. The fiscal deficit stands at ₦20.13 trillion.
Capital expenditure, excluding transfers, is maintained at ₦20.131 trillion, statutory transfers at ₦3.152 trillion, and a Sinking Fund provision of ₦388.54 billion. Total recurrent (non-debt) expenditure is set at ₦15.265 trillion, with special intervention funds for recurrent and capital spending fixed at ₦200 billion and ₦14 billion, respectively.
The committee concluded by thanking the Senate and Finance Committee members for their commitment to the national assignment, emphasizing that the approval and effective implementation of the recommendations would drive sustainable economic growth and prosperity.
