NIGERIA ECONOMY IN THE JAW OF DEFICIT FINANCING 

By AVM RTD AKUGBE IYAMU MNSA fsi

The issue with deficit financing is not whether we benefited from it in the past but is it sustainable any longer? Let us understand what budget deficit: budget deficit occurs when an entity’s (most commonly a government’s) expenses surpass its revenues over a specific period, such as a fiscal year.

It essentially means more money is going out than coming in requiring the shortfall to be covered by borrowing or drawing down reserves. Nigeria’s economy operates with a chronic budget deficit, primarily driven by weak revenue mobilization, heavy reliance on borrowing, and high recurrent expenditures.

In 2026, the Federal Government proposed a ₦58.18 trillion budget with a deficit of ₦23.85 trillion, relying heavily on debt to bridge the gap. Deficits accumulate into the national debt. Servicing this debt requires the government to dedicate a large portion of its future revenue toward interest payments rather than public development.

Future generations are burdened with the obligation to pay off this debt, often through sustained high taxes or long-term economic stagnation. Funding for critical social programs, public healthcare, education, and infrastructure projects (like roads and power grids) is often reduced.

Additionally? citizens directly suffer from poorer public amenities and fewer social safety nets. However, Some economic theories, such as Keynesian economics, argue that targeted deficit spending during a recession can stimulate aggregate demand, boost local business activity, and prevent severe economic collapse.

AVM RTD AKUGBE IYAMU MNSA fsi

PRESIDENT ASSOCIATION OF ENVIRONMENTAL PROTECTION AND CLIMATE CHANGE PRACTITIONERS

CONSULTANT ON CLIMATE CHANGE AND ANALYST ON ENVIRONMENTAL POLICIES.

WARNING!!!!!!

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