The Federal Government is facing significant challenges in translating its ambitious budget plans into real infrastructure spending, recording a 73.7 percent shortfall in capital expenditure during the first seven months of the year, according to data from the 2026–2028 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) released by the Budget Office of the Federation.
Between January and July 2025, only N834.80 billion was released to ministries, departments, and agencies (MDAs) out of a prorated capital budget of N10.81 trillion, representing less than 10 percent implementation.
Although total capital spending reached N3.60 trillion by July, it remained far below the benchmark, highlighting the widening gap between fiscal plans and actual execution.
The Budget Office attributed the weak performance primarily to efforts to complete the 2024 capital budget, which had been extended to December 2025, limiting fresh releases under the 2025 plan.
Broader expenditure underperformance was also evident. By the end of July, actual spending stood at N20.40 trillion, compared to a prorated benchmark of N32.08 trillion.
Recurrent obligations continued to crowd out development spending, with debt servicing consuming N9.81 trillion, and personnel costs, including pensions, accounting for N4.51 trillion.
Debt payments exceeded targets, with domestic and external obligations surpassing projections by 10.9 percent and 28.7 percent, respectively, underscoring rising debt pressures.
Revenue collection offered little relief. Federal retained revenue reached N13.67 trillion, or 66.8 percent of the full-year target of N23.85 trillion.
Oil revenue remained weak at N4.64 trillion (37.8 percent of target), while non-oil revenue performed better, totaling N4.27 trillion, with company income tax contributing N2.54 trillion and VAT collections of N630.10 billion, exceeding projections by 11 percent. Customs revenue lagged at N1.06 trillion against a prorated target of N1.87 trillion.
In response to the weak capital execution, the Federal Government has directed MDAs to roll over 70 percent of their 2025 capital allocations into the 2026 fiscal year, focusing on completing ongoing projects rather than launching new ones.
The 2026 Abridged Budget Call Circular, issued on December 4, 2025, imposed strict conditions, including a ban on introducing new capital projects and tighter adherence to overhead ceilings, despite inflationary pressures.
Under the new framework, only 30 percent of this year’s capital budget will be released in 2025, with the remaining 70 percent forming the basis of 2026 spending.
The Ministry of Budget and Economic Planning said the policy aims to prevent duplication, strengthen continuity, and ensure ongoing projects are completed, prioritising sectors such as national security, economic growth, education, health, agriculture, infrastructure, power, energy, and social safety nets.