The President Bola Tinubu-led Federal Government and other tiers of government saved a combined ₦3.56tn from Federation Account revenue between January and September 2026, despite the Federal Government’s reliance on borrowing to finance its budget deficit.
The amount represents a 95 per cent increase from the ₦1.83tn recorded in the corresponding period of 2025, raising questions about the country’s fiscal priorities amid mounting public debt and rising debt-servicing obligations.
A report by an Abuja-based non-profit public policy think tank, Agora Policy, titled Ten Insights from FAAC Disbursements for January-September 2026 and analysed by Saturday PUNCH on Friday, showed that savings and interventions accounted for ₦8.34tn of deductions from Federation Account revenue during the nine-month period.
The report put deductions for interventions at ₦4.78tn, making it the largest category, while savings accounted to ₦3.56tn.
Together, the two categories represented 75.1 per cent of total deductions, compared with 39.9 per cent in the corresponding period of 2025.
“Interventions accounted for the largest deduction, at ₦4.78tn, followed by savings at ₦3.56tn. In nine months, refunds amounted to ₦1.21tn and collection costs to ₦1.09tn. Transfers, at ₦469.06bn, were the smallest category,” the report stated.
The sharp increase in savings came against the backdrop of the Federal Government’s expanded borrowing plan for 2026.
The government raised its borrowing target by ₦11.31tn to ₦29.20tn from the earlier ₦17.89tn projection, while the budget deficit stood at ₦31.46tn.
Under the 2026 budget, total expenditure is projected at ₦68.32tn against expected revenue of ₦36.87tn, leaving a substantial financing gap to be covered largely through borrowing.
The Agora report, however, showed that total deductions from Federation Account revenue declined slightly by 3.5 per cent, from ₦11.50tn in the first nine months of 2025 to ₦11.10tn in the same period of 2026.
Their share of gross revenue also fell from 41.1 per cent to 35.3 per cent, allowing distributable revenue before augmentation to rise by 23.8 per cent to ₦20.36tn.
Gross Federation Account revenue increased by 12.6 per cent, from ₦27.95tn to ₦31.46tn, during the period.
According to the report, the ₦3.91tn increase in distributable revenue exceeded the ₦3.51tn growth in gross receipts because deductions declined by approximately ₦400bn.
It stated, “The modest fall in total deductions conceals a substantial change in their composition. Refunds fell by approximately N3.99tn, moving from the largest deduction category to the third-largest.
“Meanwhile, interventions and savings increased by approximately ₦3.75tn, from ₦4.59tn to ₦8.34tn. Together, interventions and savings accounted for 75.1 per cent of deductions in nine months in 2026, compared with 39.9 per cent in the corresponding period in 2025.”
A further breakdown showed refunds declined by 77 per cent, from ₦5.20tn in the first nine months of 2025 to ₦1.21tn in 2026.
Collection costs increased by four per cent to ₦1.09tn, while transfers fell by 29 per cent to ₦469.06bn.
The increase in savings and interventions raises questions about the relationship between the resources being set aside from Federation Account revenue and the government’s continued borrowing to finance expenditure.
However, the deductions cover the Federation Account and should not be interpreted as savings retained solely by the Federal Government, as the revenue is shared among the Federal Government, states and local governments under existing allocation arrangements.
The Federal Government has defended its borrowing strategy, arguing that increased expenditure pressures have outpaced additional non-borrowed resources and that borrowing is necessary to finance infrastructure and other development priorities.
Pointing to rising personnel costs, debt-service obligations, electricity support and infrastructure commitments as major pressures on public finances, the Presidency noted that borrowing is being redirected towards productive assets rather than short-term consumption, with debt service standing at about 65 per cent of revenue in the first half of 2026.
President Bola Tinubu, in a statement published by the State House on October 30, defended continued borrowing, arguing that the funds were being channeled into infrastructure and productive assets rather than consumption.
This followed a request to the National Assembly seeking approval for a supplementary external borrowing plan of $20.52bn and €1.045bn to finance infrastructure and development projects across the country.
“The objective is to increasingly direct new borrowing towards productive capital investment, while maintaining fiscal discipline, reducing refinancing pressures and ensuring that public debt translates into measurable economic value. Nigeria borrows to invest in roads, ports, rail and power that will generate growth, revenue and jobs for decades,” he said.
While acknowledging that the debt-service burden stood at about 65 per cent of revenue in the first half of 2026, the President maintained that the economic benefits of infrastructure investment justified the borrowing.
The revised 2026 borrowing plan increased the Federal Government’s proposed borrowing to ₦29.20tn, while debt service was projected at ₦15.81tn.
Credit: punchng.com
