The Federal Government has directed all ministries, departments, and agencies (MDAs) to transfer 70% of their 2025 capital budget provisions into the 2026 fiscal year. The directive forms part of a wider effort to ensure continuity of existing projects, reduce pressure from new capital demands, and better manage limited revenues and fiscal risks.
The instruction is contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning and distributed to ministers, service chiefs, heads of government agencies, and other senior officials. The document serves as the official policy guideline for developing the 2026 Appropriation Bill.
According to the circular, the 2026 budget cycle will be shaped by strict expenditure discipline. The government made clear that next year’s capital budget will not accommodate new project proposals, as MDAs are required to continue implementing the capital allocations already approved under the 2025 budget. The rollover system, it said, must be aligned with national priorities and the immediate development agenda of the current administration.
MDAs are therefore mandated to upload 70% of their 2025 capital allocations onto the budget preparation platform to form the basis of their 2026 capital submissions. The circular emphasizes that all rollovers must reflect the government’s priority sectors, which include national security, economic recovery, education, health, agriculture, infrastructure, power and energy, as well as social safety programmes, especially those targeted at women and youth.
Only 30% of 2025 Capital Allocations to Be Implemented in Current Fiscal Year
The new structure essentially reverses the previous practice of carrying over capital projects in full. Under the 2026 framework, only 30% of the 2025 capital budget will be released and implemented within the current fiscal year. The remaining 70% becomes the new capital baseline for 2026.
Government officials argue that this approach will help eliminate duplication, reduce wastage, and ensure that national funds are channeled into ongoing projects with measurable progress. MDAs are also warned not to exceed their 2025 overhead ceilings when preparing their 2026 expenditure estimates. The document acknowledges inflationary pressures affecting overhead costs but states that weak revenue performance and rising debt service costs require restraint.
The circular notes that all budget estimates must be consistent with the 2026–2028 Medium-Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper, which represent the Federal Government’s pre-budget policy statement. It also highlights the administration’s core development programmes, including the Renewed Hope Infrastructure Development Plan, the Ward Development Plan, the National Development Plan, and the Accelerated Stabilisation and Actualisation Plan.
While reinforcing the need for fiscal discipline, the government says all expenditure proposals submitted by MDAs will undergo rigorous scrutiny to allow only essential spending and ensure value for money. The renewed approach is also intended to strengthen budget formulation, implementation, monitoring, and evaluation.
Budget Submission to Be Completed Online
The 2026 budget submission process will be conducted entirely through digital platforms. MDAs are to submit entries through the GIFMIS Budget Preparation Subsystem, while government-owned enterprises (GOEs) must use the Budget Information Management and Monitoring System. All submissions must be completed by December 9, 2025, and the circular explicitly states that budget officers are not authorized to upload entries on behalf of any MDA.
Capital Spending Declines, Debt Service Rises
The financial framework attached to the call circular points to a challenging revenue outlook for 2026. Available funds for the Federal Government and GOEs are projected to decline marginally from N54.99 trillion in 2025 to N54.46 trillion in 2026. Meanwhile, debt service costs are estimated to rise from N13.94 trillion to N15.52 trillion, further tightening fiscal space.
Statutory transfers are projected to fall from N3.64 trillion in 2025 to N3.15 trillion in 2026, while recurrent non-debt expenditure is estimated at N15.26 trillion. Total capital spending is expected to decline from N26.19 trillion in 2025 to N22.37 trillion in 2026, reflecting lower capital resources available to MDAs and donor-funded project portfolios. Funds available for MDA capital expenditure will drop sharply from N12.39 trillion to N8.67 trillion, while project-tied loans fall from N3.36 trillion to N2.05 trillion.
As a result of pressure from rising debt service obligations and shrinking capital allocations, the national budget deficit is expected to expand considerably, widening from N14.10 trillion this year to N20.12 trillion in 2026.
Overlapping Budgets and Reform Debate
Nigeria has increasingly operated with overlapping budgets since 2023, when the Federal Government began extending capital implementation timelines beyond the calendar year. By 2024, multiple budget instruments were active simultaneously, including the 2023 main budget, 2023 supplementary budget, 2024 main budget, and a 2024 supplementary budget, even as work began on new appropriations.
The Budget Office has consistently defended this approach, arguing that delayed implementation cycles and multi-year infrastructure projects justify the practice. According to the agency, the overlapping strategy is a transitional measure under ongoing reforms aimed at aligning federal spending with long-term development outcomes. However, some analysts argue that the system weakens accountability and disrupts the country’s goal of maintaining a January–December fiscal cycle, a standard introduced to support clearer financial planning and national development coordination.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
