Chief Economist at SPM Professionals, Paul Alaje, has provided detailed insights into Nigeria’s 2026 budget framework, describing it as a stabilisation-focused fiscal plan shaped significantly by rebased macroeconomic indicators rather than headline optimism.
Recall that on December 19, 2025, President Bola Tinubu presented a ₦58.18 trillion 2026 budget proposal to lawmakers.
Meanwhile, in a comprehensive analysis of the approved 2026–2028 Medium-Term Expenditure Framework (MTEF/FSP), Alaje, in a lengthy post on X on Monday, said the budget should be understood as both an economic roadmap and a statistical recalibration of Nigeria’s economic realities.
According to him, “the 2026 Budget, anchored on the approved 2026–2028 Medium-Term Expenditure Framework (MTEF/FSP), presents a macroeconomic outlook focused on stabilisation, confidence-building, and medium-term growth.” He stressed that this outlook must be interpreted within the context of rebased GDP and rebased inflation figures, which now define how economic performance is measured and communicated.
Alaje explained that rebasing does not distort reality but rather updates it. “The budget, therefore, represents not just an economic plan but a recalibration of how Nigeria’s economic realities are statistically captured,” he said.
On oil revenue projections, the economist noted that the Federal Government deliberately avoided aggressive assumptions. He described the benchmark crude oil prices of $64.85 per barrel in 2026, $64.30 in 2027, and $65.50 in 2028 as cautious and aligned with global market expectations.
According to Alaje, “they avoid the fiscal risks associated with inflated oil-price assumptions.”
He added that crude oil production is expected to rise modestly from 1.84 million barrels per day in 2026 to 1.92 million barrels per day by 2028, reflecting anticipated improvements in security, operational efficiency, and upstream investments.
However, he cautioned against overreliance on oil, noting that “the implication is that oil is expected to provide revenue stability rather than rapid growth, reinforcing the need to accelerate non-oil revenue mobilisation.”
On the exchange rate, Alaje said the ₦1,400 per dollar assumption for 2026 is meant to support stability rather than speculative gains. “The exchange-rate assumption of ₦1,400 per US dollar for 2026 reflects expectations of improved FX liquidity, policy consistency, and reduced volatility,” he said, adding that this would help moderate inflation and improve planning certainty for investors.
Inflation is projected at 16.5% in 2026, falling to 13% in 2027 and 9% by 2028—figures Alaje said are based on rebased inflation metrics.
He explained: “It is essential to stress that these figures are based on rebased inflation metrics, following updates to the consumer basket, weights, and price coverage.” According to him, rebasing does not deny inflationary pressures but rather measures them more accurately. “Rebased inflation does not deny the existence of price pressures; rather, it re-measures inflation using a more current consumption structure, reflecting how households actually spend today.”
Addressing public concerns about the disconnect between reported inflation and everyday market prices, Alaje said lower inflation figures do not automatically translate into cheaper goods.
“Inflation measures the rate of increase, not price levels,” he said, explaining that prices may remain high even when inflation slows. He also pointed out that “previous inflationary shocks are cumulative,” meaning years of high inflation have already pushed prices up.
Other factors, he said, include the dominance of food and transport in household spending, persistent supply-side constraints such as insecurity, logistics costs, and energy prices, as well as the slow pace at which wages adjust to rising costs. “Income growth lags price adjustment, amplifying the perception of cost-of-living pressure,” he noted.
Alaje added that without rebasing, inflation projections for 2026 would likely have been much higher. “In this sense, rebasing improves measurement accuracy, but it does not eliminate the need for real supply-side inflation control,” he said.
Summarising his position, he outlined several key takeaways: “First, the 2026 budget framework is built on rebased macroeconomic indicators, which improve accuracy but require careful public interpretation. Second, lower inflation numbers do not mean lower prices, but rather a slower pace of increase. Third, inflation control remains the central anchor of fiscal and monetary policy success. Fourth, oil assumptions are realistic, but non-oil revenue growth is essential for resilience. Finally, growth projections are achievable only with disciplined execution and productivity gains.”
Alaje also cautioned against misrepresenting his views on rebased inflation figures. “Please note that I did not discredit the rebased 14% rate. The emphasis was on the fact that people wondered why it had not been reflected in the market,” he clarified.
He stressed that brief media interviews often lack the depth required for full explanation. “20 to 40-minute interviews will not provide the full answer. Please do not misquote or misinterpret my responses. The new rebased number is not DISCREDITED. I only compared it with the 2009-based year,” he said, urging analysts to rely on proper data comparisons.
The economist concluded by encouraging informed public discourse, noting that accurate interpretation of rebased figures is critical to understanding Nigeria’s evolving economic landscape.
