Nigeria’s fiscal strategy faces its toughest test in 2026. Government revenue is rising, inflation is easing from recent highs, and new tax laws are coming into effect.
Some of the key fiscal tests facing the government are revenue mobilisation, debt management, tax reform execution, inflation/household pressure, and investor confidence.
The challenge now is whether the government can strengthen its finances without putting more pressure on households or scaring away investors. The decisions taken this year will shape not only budget outcomes, but also public trust in the reform agenda.
How these forces interact over the next year will determine whether consolidation strengthens economic resilience or exposes new fault lines.
At the centre of this transition are a set of fiscal and tax policy tests that will define outcomes in 2026.
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Revenue mobilisation without stalling growth
The first test is whether revenue gains can be sustained without weakening consumption, investment, or formal sector participation.
Non-oil revenue has expanded sharply, rising from N5.96 trillion in 2022 to N16.09 trillion in 2024. However, nominal GDP growth has been more measured, creating a “tax-to-GDP” tension.
While the Central Bank of Nigeria (CBN) remains optimistic, projecting FGN retained revenue to hit N35.51 trillion in 2026, analysts warn of a communication gap.
Dumebi Oluwole, lead economist at Stears said, “One of the biggest sources of pushback is information asymmetry as many people still do not understand the potential benefit of these policies.”
“The government needs to do more to communicate why these policies matter clearly”. With information asymmetry, implementation risks rise, making revenue targets difficult to achieve”, Oluwole said.
The challenge is not just raising revenue, but also how the money is collected and how fast, especially when businesses and households are already under financial pressure.
Managing debt service pressures
The second test is whether rising revenues can meaningfully ease debt service constraints.
Debt servicing absorbed 51.3 percent of government revenue in 2022, climbed to 68.4 percent in 2023, and eased to 53.1 percent in 2024 as revenues expanded. While the improvement is notable, the absolute burden remains high, leaving limited room for capital expenditure and social investment.
This creates a narrow margin for error. Any slowdown in revenue growth, increase in borrowing costs, or pressure on the exchange rate could quickly reverse recent gains.
The key issue, therefore, is not whether revenues are rising, but whether they can consistently outpace debt obligations in a volatile macroeconomic environment.
BST Consulting noted in a recent newsletter, that “strategic fiscal planning and revenue optimisation will be essential to keep debt sustainable while still supporting development priorities.”
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Execution of reforms: the law–reality gap
The third test lies in execution.
New fiscal and tax laws are designed to broaden the base, simplify administration, and strengthen revenue credibility. Early technical reviews, however, highlight areas where gaps, ambiguities, or design choices could undermine these objectives if left unresolved.
Key issues include the treatment of capital gains in a high-inflation environment, the scope and administration of indirect transfer rules, limitations on foreign-currency expense deductions, VAT-linked deductibility provisions, and compliance obligations for non-resident entities. In each case, uncertainty carries real economic costs, raising compliance burdens, increasing disputes, and shaping investment decisions.
The effectiveness of reform will therefore be measured less by legislative ambition and more by administrative clarity, alignment with economic realities, and the speed with which corrective guidance is issued.
Inflation, household pressure, and political feasibility
The fourth test is political and social.
Inflation peaked in 2024, with headline inflation reaching 34.8 percent and food inflation nearly 40 percent, before moderating in 2025. Even with easing pressures, households remain strained, and purchasing power has been materially eroded over the past three years.
The fourth test is political. Although the CBN projects headline inflation to moderate to an average of 12.94 percent in 2026, the social cost of the journey has been high.
Economic adjustments have a direct impact on household welfare, and the “trust deficit” is now a macroeconomic risk.