The Federal Government recorded a significant revenue shortfall in the first three months of 2026, raising fresh concerns about its ability to fund the national budget without depending heavily on borrowing.
Figures from the government’s first-quarter budget implementation report show that Nigeria generated N5.08 trillion between January and March, against an expected N9.22 trillion for the period. This represents a shortfall of 44.93 per cent.
The poor performance came despite favourable conditions in the international oil market, where crude oil prices averaged $83 per barrel, significantly higher than the $64.85 benchmark adopted in the 2026 budget.
However, Nigeria’s inability to produce enough crude oil prevented the country from fully benefiting from the increase in global prices. Average daily production stood at 1.55 million barrels, falling short of the budget target of 1.84 million barrels.
The production challenge had a major impact on oil earnings. The government projected N9.33 trillion from gross oil revenue for the quarter but realised only N2.97 trillion, leaving a deficit of N6.36 trillion.
The report attributed the poor performance of the oil sector to persistent crude oil theft, pipeline vandalism, insecurity and disruptions to production. It also identified inadequate investment in modern infrastructure, corruption and uncertainty in the regulatory environment as factors affecting output.
Revenue from non-oil sources also failed to meet expectations. The government generated N4.91 trillion, compared with the projected N7.26 trillion, representing a 32.34 per cent shortfall.
Although Value Added Tax and Company Income Tax recorded increases of 17.06 per cent and 23.68 per cent respectively compared with the same period in 2025, customs revenue declined by 9.23 per cent.
The country’s financial situation was further complicated by rising debt obligations. The Federal Government spent N4.63 trillion on debt servicing during the quarter, exceeding its target of N3.88 trillion by 19.27 per cent.
With debt payments consuming almost all the revenue generated within the period, the government had limited resources available for other responsibilities, including infrastructure, social welfare and economic development.
Nigeria also recorded a fiscal deficit of N4.69 trillion between January and March. The shortfall was largely financed through domestic borrowing, alongside loans from multilateral and bilateral institutions and proceeds from privatisation.
Meanwhile, the release of funds for capital projects in the 2026 budget had yet to begin as of March 31. The government explained that the utilisation period for capital releases under the 2025 budget had been extended until December 31, 2026.
The latest figures highlight the challenges facing the Tinubu administration as it struggles to improve government revenue despite rising oil prices and positive developments in the global market.
They also raise questions about the government’s ability to meet its spending commitments, reduce borrowing and deliver planned projects without addressing the persistent problems affecting oil production and revenue collection.
