Chief Economist at SPM Professionals, Dr Paul Alaje, has warned that President Ndubu’s 2026 budget will only inspire confidence if the Federal Government demonstrates strict discipline by ending Nigeria’s long-standing practice of running multiple budgets concurrently.
Speaking in an interview on ARISE News on Friday, Alaje said the repeated rollover of capital expenditure from one fiscal year to another has continued to undermine inflation control, policy credibility and economic development.
“It requires a very high level of discipline from the executive for us to end the cycle of running 2023, 2024, 2025 and 2026 budgets concurrently,” Alaje said.
“The president has said it clearly that going forward, there will be an end to that. I would really appreciate it if the president fulfils that promise, because that is what will bring confidence.”
He noted that official documents already indicate that only about 30 per cent of the 2025 capital expenditure has been implemented, with roughly 70 per cent carried over into the 2026 budget, raising doubts about the government’s ability to operate a true 12-month fiscal cycle.
“Only about 30 per cent of 2025 capital expenditure, which is the most significant portion of the budget because it represents investment in the economy, has been implemented, while about 70 per cent is to be carried over into 2026,” he said.
“If a budget is meant to run for 12 calendar months or one fiscal year, then the president must lead by example. He has promised, and by this time next year, we can review whether that has been done.”
Alaje stressed that persistent rollover budgeting carries serious economic consequences.
“It is very important that we do not keep rolling over our budgets because it has implications for inflation, it has implications for confidence, and it has implications for the overall outcome of budget implementation,” he said.
While acknowledging some positive aspects of the 2026 proposal, Alaje said the budget elicited mixed feelings, arguing that optimism must be tempered with realism.
“The president has named his budget and mentioned areas that should excite us, but for me this budget comes with mixed feelings,” he said.
“Some parts are really exciting, while some parts are not as exciting as they were demonstrated.”
He welcomed increased allocations to defence and social sectors, particularly security, health and education.
“One of the exciting areas is increased spending on defence, and I am happy that the president read the riot act to those who are fomenting trouble and trying to set our nation apart,” Alaje said.
“Across all religions and regions, the president was very clear on why more money is being voted for security.”
“We have also seen more allocation to health, and education and health were relatively prioritised in this budget. Those are commendable.”
However, he questioned whether the structure of spending can truly deliver economic transformation.
“When the president said this budget will take us out of the dark, we need to ask: out of the dark to where?” he said.
Alaje expressed concern that despite a total expenditure of over ₦58 trillion, capital spending remains below the level required to drive development.
“When you look at the total expenditure of over ₦58 trillion, how much of that is going into capital expenditure? It is still less than 50 per cent,” he said.
“For a nation of our size, we must get to a point where at least 50 per cent of every naira spent goes into capital expenditure.”
He warned that without this shift, development will remain elusive.
“If we do not do that, I am afraid we may not get to the point where we can say we are truly promoting development,” he said.
“I know funds are scarce, but to get to that point, we need to spend more on real capital.”
Alaje also raised strong concerns about Nigeria’s rising debt burden, warning that debt servicing could consume an unsustainable share of government revenue.
“Government is projecting that debt service will be nearly 50 per cent of total revenue,” he said.
“But if we go by the same budget presentation which showed that only about 60 per cent of projected revenue was achieved in 2025, then what we are saying is that debt service could rise from over 50 per cent to nearly 80 or 85 per cent of actual revenue in 2026.”
“That is not what we want to see, and that will not come with much excitement.”
He added that borrowing pressures remain unresolved.
“Another issue is debt itself – how much are we hoping to borrow to cover the entire budget?” Alaje asked.
“While this budget has some exciting parts, there are other areas where, honestly, the president has very tough work ahead of him.”
Reflecting on macroeconomic assumptions, Alaje said the exchange rate projection of ₦1,400 to the dollar could be met, but only under strict conditions.
“Do I think we can meet it? Yes, if we partner effectively with local refineries to keep producing PMS and diesel for local consumption,” he said.
“If we return to heavy importation, we will see the exchange rate spike again.”
He warned that 2026, being a pre-election year, poses heightened risks.
“Pre-election years are very sensitive and susceptible to high inflation and exchange rate depreciation,” Alaje said.
“The president must work with politicians to ensure that hoarding of dollars does not happen.”
“Only those who genuinely need foreign currency for industrial imports or travel should hold hard currency. For political purposes, we must do everything to stop that.”
He cautioned that failure to act could reverse recent gains.
“If this is not done, I can assure you that the exchange rate gains we have made through the efforts of government, the Central Bank and locally produced fuel could be lost,” he said.
On the ₦23 trillion budget deficit, Alaje said capital expenditure alone is nearly equal to the entire shortfall.
“When you look at the deficit, it is huge, and our capital expenditure has almost swallowed the entire deficit,” he said.
“That is the worry I have been emphasising.”
He explained that without borrowing, capital investment would suffer.
“If we do not borrow, it may be difficult to invest anything in capital expenditure because all our revenue, which we are not even sure we will achieve fully, will go into recurrent expenditure,” he said.
While acknowledging the need for recurrent spending, he called for broader revenue generation.
“Salaries must be paid and government must run, but that is why we must find alternative and additional means of generating revenue,” Alaje said.
Alaje also criticised weak adherence to the Medium-Term Expenditure Framework (MTEF).
“For the past 10 to 12 years, government presents the MTEF, but in subsequent years, they hardly refer to it,” he said.
“Instead, they narrow their focus to the previous budget rather than looking holistically at the MTEF.”
He urged the National Assembly to enforce discipline.
“The National Assembly must ensure that the MTEF captures the real expectations of government for three years, not just as a formality for producing a budget,” he said.
Reiterating his position on capital spending, Alaje concluded:
“If we must spend any naira, at least 50 per cent of it must go into real core capital, not administrative capital,” he said.
“That is how Nigeria can embrace the development we all yearn for.”
Boluwatife Enome
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