The Federal Government of Nigeria has officially set its budget exchange rate projection for the 2026 fiscal year at N1,512 to one US Dollar. This critical economic parameter forms part of the newly approved 2026–2028 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which will guide the nation's financial planning.
Key Fiscal Assumptions for 2026
Minister of Budget and Economic Planning, Abubakar Atiku Bagudu, disclosed the framework during a briefing in Abuja on Wednesday, December 3, 2025. The document outlines a conservative oil price benchmark of $64.85 per barrel. For the first time, the framework adopts dual oil production targets: an ambitious target of 2.06 million barrels per day (mbpd) and a more prudent benchmark of 1.80 mbpd for budgeting purposes to avoid revenue shortfalls.
Bagudu emphasized the cautious approach, noting that Nigeria's Bonny Light crude typically commands a premium price, but the government opted for a lower benchmark for an "abundance of caution." He also highlighted that 2026 is a pre-election year, a period where increased political spending could exert pressure on the exchange rate.
Revenue Projections and Spending Priorities
The macroeconomic assumptions for 2026 project a Gross Domestic Product (GDP) growth rate of 4.68%. According to the framework, the gross federation revenue is estimated at a substantial N50.74 trillion. This revenue will be shared among the three tiers of government:
- Federal Government: N22.60 trillion
- State Governments: N16.30 trillion
- Local Governments: N11.85 trillion
Total federal government revenue, including earnings from government-owned enterprises, is projected at N34.33 trillion. The major expenditure heads outlined include:
- Statutory Transfers: Approximately N3 trillion
- Debt Service: N15.91 trillion
- Non-debt Recurrent Expenditure: About N15.27 trillion
The government anticipates a budget deficit of N20.10 trillion, which represents about 3.61% of GDP. This deficit implies a total federal spending envelope of N54.43 trillion for the 2026 fiscal year.
Context and Economic Backdrop
This new exchange rate of N1,512/$1 represents an adjustment from the N1,400/$1 rate set for the 2025 budget. The MTEF/FSP is a statutory three-year fiscal guide that sets the assumptions for the annual appropriation bill, covering oil benchmarks, revenue, deficits, and spending priorities.
The framework was developed with inputs from various ministries, the private sector, civil society, and development partners. It is scheduled to be transmitted to the National Assembly by Monday, December 8, 2025, for legislative scrutiny and approval.
This fiscal planning comes against a backdrop of strengthening external reserves, which recently rose to $42.202 billion, bolstered by crude oil sales, diaspora remittances, and foreign portfolio investments. A stronger reserve position enhances Nigeria's capacity to stabilize the Naira and meet its external obligations.
