The Federal Government and other tiers of government put aside a combined N3.56tn from Federation Account revenue between January and September 2026, even as the Federal Government leans more heavily on borrowing to fund its budget deficit.
The figure is 95 per cent higher than the N1.83tn recorded in the same period of 2025, which raises questions about fiscal priorities at a time of growing public debt and rising debt-service costs.
A report by Agora Policy, titled Ten Insights from FAAC Disbursements for January-September 2026 and reviewed by The PUNCH on Friday, showed that savings and interventions together accounted for N8.34tn of the deductions from Federation Account revenue over the nine months.
Interventions were the largest category at N4.78tn, with savings next at N3.56tn. Together, they made up 75.1 per cent of total deductions, up from 39.9 per cent a year earlier. The report also put refunds at N1.21tn and collection costs at N1.09tn, with transfers the smallest item at N469.06bn.
The jump in savings comes as the Federal Government has enlarged its borrowing plan for 2026. The borrowing target was raised by N11.31tn to N29.20tn, from an earlier projection of N17.89tn, while the budget deficit stood at N31.46tn. Under the 2026 budget, total spending is projected at N68.32tn against expected revenue of N36.87tn, leaving a wide financing gap to be filled mostly through borrowing.
The Agora report, however, noted that total deductions from Federation Account revenue fell slightly, by 3.5 per cent, from N11.50tn in the first nine months of 2025 to N11.10tn in the same period of 2026. Their share of gross revenue also dropped from 41.1 per cent to 35.3 per cent. As a result, distributable revenue before augmentation rose by 23.8 per cent to N20.36tn.
Gross Federation Account revenue grew by 12.6 per cent, from N27.95tn to N31.46tn. According to the report, distributable revenue rose by N3.91tn, more than the N3.51tn increase in gross receipts, because deductions fell by roughly N400bn.
The report said the small decline in total deductions masks a major change in what they are made up of. Refunds dropped by about N3.99tn, falling from the biggest deduction category to the third-biggest, while interventions and savings rose by about N3.75tn, from N4.59tn to N8.34tn.
A further breakdown showed that refunds fell by 77 per cent, from N5.20tn in the first nine months of 2025 to N1.21tn in 2026. Collection costs rose by four per cent to N1.09tn, while transfers declined by 29 per cent to N469.06bn.
The growth in savings and interventions prompts questions about how the money being set aside from Federation Account revenue squares with the government’s continued borrowing. It is important to note, though, that the deductions relate to the Federation Account as a whole and should not be read as savings kept solely by the Federal Government. The revenue is shared among the Federal Government, states and local governments under existing arrangements.
The Federal Government has defended its borrowing approach, arguing that spending pressures have outpaced additional revenue from non-borrowed sources and that borrowing is needed to fund infrastructure and other development priorities. It has also cited rising personnel costs, debt-service obligations, electricity support and infrastructure commitments as major strains on public finances.
A Presidency statement on its infrastructure investment strategy said borrowing was being directed toward productive assets rather than short-term consumption. It also acknowledged the burden of debt service, which took up about 65 per cent of revenue in the first half of 2026.
