Fitch Ratings has projected that Nigeria’s budget deficit will widen to nearly 5% in 2026, driven by higher expenditure, including higher social and security outlays and election-related expenses.
It also forecasts Nigeria’s foreign exchange reserves will decline to $47 billion by the end of 2026, despite ongoing reforms aimed at stabilising the economy.
“Fitch forecasts the general government (GG) budget deficit will widen to nearly 5% in 2026, driven by higher expenditure, including higher social and security outlays and election-related expenses.
“Parliament has approved a revised 2026 federal budget that increases spending by nearly 3pp to about 14% of GDP, with a large share allocated to capex, including rollovers from 2025, although Fitch expects capex execution will remain weak. Despite this, our spending forecast is much higher than the previous year.”
Gross Reserves to Decline
Fitch noted that while reserves have strengthened significantly in recent months, they are expected to face pressure.
It says gross FX reserves rose to USD49.4 billion at the end of March 2026, from USD32 billion in mid-April 2024.
“We forecast a marginal decline to USD47 billion at end-2026, reflecting higher spending pressures and external risks. However, we expect reserves to cover seven months of current external payments, well above the ‘B’ median of 4.3 months.” it noted.
Nigeria’s External Reserves Growth
Nigeria’s gross reserves rose to $50.45 billion in February 2026, the highest level in over a decade. The Central Bank of Nigeria said this provided an import cover of 9.68 months for goods and services.
However, reserves declined to $48.85 billion early in April, despite this trend, the CBN projects reserves will increase to $51.04 billion in 2026 from $45.01 billion in 2025.
