The Federal Executive Council (FEC) has approved Nigeria’s 2026–2028 Medium-Term Expenditure Framework (MTEF), a critical fiscal blueprint that will guide the country’s economic planning over the next three years. The MTEF sets out the Federal Government’s revenue projections, macroeconomic assumptions, and expenditure priorities, providing a foundation for annual budget preparations.
The approval was granted during the FEC meeting held on Wednesday at the State House in Abuja, and presided over by President Bola Ahmed Tinubu. Following the meeting, the Minister of Budget and Economic Planning, Senator Atiku Bagudu, briefed State House correspondents on the framework’s key parameters and projections.
Revenue Outlook for 2026
According to Bagudu, the Federal Government expects to mobilize a total of N34.33 trillion in revenue in 2026. This projection includes N4.98 trillion expected from government-owned enterprises (GOEs), marking an effort to deepen earnings from public institutions and reduce the government’s heavy reliance on statutory allocations from the Federation Account.
The revenue outlook reflects a downward revision from earlier projections for the 2026 fiscal year. Bagudu explained that the new estimate is N6.55 trillion lower than previous figures, noting that federal allocations are expected to decline by N9.4 trillion, representing a 16% reduction compared to the 2025 budget projections. This suggests that the Federal Government will be working within a more constrained fiscal space, driven by tightening global financial conditions, volatile oil markets, and rising domestic obligations.
The minister also disclosed that statutory transfers for the period are projected to reach around N3 trillion, covering constitutionally mandated allocations to key national institutions and special funds.
Macroeconomic Assumptions: Oil Benchmarks, Exchange Rate
At the core of the MTEF are the macroeconomic variables that drive Nigeria’s revenue performance, particularly crude oil production, oil price benchmarks, and exchange rate assumptions. The FEC has adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, reflecting ambitious expectations for improved security in oil-producing regions, better compliance with OPEC quotas, and ongoing investments in the upstream sector.
However, for budgeting purposes, a more conservative production estimate of 1.8 mbpd will be applied to ensure prudent fiscal planning in case of output disruptions or unexpected market fluctuations.
Additionally, the council approved an oil price benchmark of $64 per barrel, a figure informed by geopolitical risks, global demand forecasts, and supply dynamics among major producers. The exchange rate for 2026 has been benchmarked at N1,512 per US dollar, a significant indicator that reflects the Federal Government’s outlook on currency movements, capital flows, and political and economic developments ahead of the 2027 general elections.
Bagudu emphasized that all fiscal parameters were derived from extensive macroeconomic analysis by the Budget Office of the Federation and other relevant agencies. Cabinet members also reviewed the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets spending limits for MDAs and ensures consistency with the government’s fiscal consolidation objectives.
Legislative Backing and Debt Strategy
The MTEF approval comes months after the Senate endorsed the 2025–2027 MTEF and Fiscal Strategy Paper (FSP), which provided the framework for the 2025 budget proposal of N47.9 trillion. Alongside that approval, the Senate also endorsed the Federal Government’s external borrowing plan of $21.5 billion, presented by President Tinubu to support budget financing and strategic development projects.
These loans form part of the broader fiscal strategy aimed at stabilizing public finances and supporting critical investments in infrastructure, energy, defense, agriculture, and human capital development.
During his 2025 budget presentation, President Tinubu stated that his administration expects inflation to ease from 34.6% to 15% by the end of 2025, supported by tighter monetary policy and supply-side reforms. He also projected that the naira would strengthen from approximately N1,700 per US dollar to N1,500, reflecting expectations of improved foreign exchange liquidity and reforms in currency management.
Exchange Rate Projections and Market Outlook
Meanwhile, in its latest macroeconomic outlook, Standard Bank projected that the naira could close at approximately N1,458.8 per dollar by December 2025. This projection is slightly stronger than the Federal Government’s assumptions and signals relative optimism from the banking sector about the trajectory of exchange rate stabilization.
With the approval of the MTEF, the Federal Government now has a clear fiscal pathway for the medium term. The next stage will be the presentation of the 2026 budget to the National Assembly, where the assumptions and expenditure priorities outlined in the framework will translate into concrete fiscal policy decisions.
