The Federal Government and other tiers of government saved a combined N3.56tn from Federation Account revenue between January and September 2026, despite the Federal Government’s increasing reliance on borrowing to finance its budget deficit.
The amount represents a 95 per cent increase from the N1.83tn recorded during the corresponding period in 2025, raising questions about the government’s fiscal priorities amid rising public debt and debt servicing obligations.
According to a report by Agora Policy, titled Ten Insights from FAAC Disbursements for January to September 2026, analysed by The PUNCH, savings and interventions accounted for N8.34tn of deductions from Federation Account revenue during the nine month period.
The report identified interventions as the largest deduction, accounting for N4.78tn, while savings stood at N3.56tn.
Together, the two categories represented 75.1 per cent of total deductions, compared with 39.9 per cent recorded during the corresponding period in 2025.
The report stated that refunds amounted to N1.21tn, collection costs stood at N1.09tn, while transfers accounted for N469.06bn.
The increase in savings came amid an expanded borrowing plan by the Federal Government for the 2026 fiscal year.
The government reportedly increased its borrowing target by N11.31tn, from the initial N17.89tn projection to N29.20tn, while the budget deficit stood at N31.46tn.
Under the 2026 budget, total expenditure was projected at N68.32tn against expected revenue of N36.87tn, leaving a substantial financing gap expected to be covered largely through borrowing.
However, the Agora Policy report showed that total deductions from Federation Account revenue declined by 3.5 per cent, from N11.50tn in the first nine months of 2025 to N11.10tn during the same period in 2026.
The deductions also declined as a proportion of gross revenue, moving from 41.1 per cent to 35.3 per cent.
Meanwhile, gross Federation Account revenue increased by 12.6 per cent, rising from N27.95tn to N31.46tn during the period under review.
The report explained that distributable revenue before augmentation increased by 23.8 per cent to N20.36tn, with the reduction in deductions contributing to the improvement.
It further revealed that refunds declined by 77 per cent, from N5.20tn in 2025 to N1.21tn in 2026.
Collection costs, however, increased by four per cent to N1.09tn, while transfers declined by 29 per cent to N469.06bn.
Despite the increased savings, the report highlighted concerns about the relationship between funds being set aside from Federation Account revenue and the Federal Government’s continued borrowing to finance expenditure.
The report also clarified that the N3.56tn savings should not be interpreted as funds belonging exclusively to the Federal Government, as Federation Account revenue is shared among the Federal Government, state governments and local governments under existing allocation arrangements.
Meanwhile, the Federal Government has defended its borrowing strategy, arguing that rising personnel costs, debt servicing, electricity support and infrastructure commitments have increased expenditure pressures.
President Bola Tinubu has maintained that borrowing is being directed towards productive investments, including roads, ports, railways and electricity infrastructure, rather than short term consumption.
The development has renewed discussions about fiscal transparency, public spending priorities and the need to ensure that increased government revenue translates into improved living conditions for Nigerians.
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