Oil price dispute stalls 2026–2028 budget framework as Reps step down MTEF/FSP

The House of Representatives on Wednesday stepped down consideration of the 2026–2028 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) after sharp disagreements over crude oil price benchmarks and revenue assumptions threatened the integrity of the proposed framework.

The decision followed an intense debate during plenary, shortly after the chairperson of the Joint Committees on Finance and National Planning and Economic Development, James Faleke, laid the reports before the House.

Lawmakers had resolved into the Committee of Supply to consider the reports when confusion arose over proposed changes to key macroeconomic assumptions, particularly crude oil benchmark prices and their implications for government revenue and the size of the 2026 budget.

The joint committee recommended a downward review of crude oil benchmark prices from the executive’s projections of $64.85, $64.30 and $65.50 per barrel for 2026, 2027 and 2028, to $60, $65 and $70 respectively. The committee said the proposal was informed by geopolitical tensions in Europe and the Middle East, as well as volatility in global oil markets.

The recommendation immediately drew concern from Speaker of the House, Tajudeen Abbas, who warned that altering the oil benchmark without corresponding adjustments to other figures would distort the entire framework.

He queried whether the committee had adequately accounted for the revenue losses that would result from a lower oil price assumption and how such shortfalls would affect the projected ₦54.46 trillion 2026 budget.

President Bola Tinubu had transmitted the MTEF/FSP to the House last Wednesday, after which it was referred to the joint committees. A public hearing was held on Tuesday with key members of the economic management team, including the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Minister of Budget and National Planning, Atiku Bagudu.

Presenting the report, Faleke said Nigeria’s crude oil production outlook was positive, noting that the country recorded one of the strongest month-on-month production gains among OPEC members in November 2025, according to the December 2025 OPEC Monthly Oil Market Report.

He added that the framework projected exchange rates of ₦1,512 for 2026, ₦1,432.15 for 2027 and ₦1,383.18 for 2028, while inflation was forecast at 16.5 per cent, 13 per cent and nine per cent respectively. Real GDP growth was projected at 4.68 per cent in 2026, rising to 7.9 per cent by 2028, driven largely by ongoing economic reforms and a new tax regime.

On expenditure, the committee put the proposed 2026 federal budget at ₦54.46 trillion, with retained revenue of ₦34.33 trillion, new borrowings of ₦17.88 trillion, debt servicing of ₦15.52 trillion and a fiscal deficit of ₦20.13 trillion.

However, lawmakers questioned how these figures could remain intact if oil price assumptions were lowered.

Speaker Abbas cautioned that reducing the benchmark price by about $5 per barrel would significantly impact oil and gas revenues and asked the committee to clearly state whether any resulting deficit would be absorbed through increased domestic revenue or additional borrowing.

Deputy Speaker Benjamin Kalu echoed the concern, noting that while a conservative oil benchmark was sensible, it would inevitably create a revenue gap that needed to be clearly addressed.

Responding, Faleke argued that the MTEF/FSP was based on assumptions and that detailed figures would still be refined during budget preparation. He maintained that non-oil revenues were not reduced under the framework and that the committee focused mainly on oil-related projections.

The debate was further complicated by concerns over timing. Deputy Chairman of the Finance Committee, Saidu Abdullahi, faulted the late submission of the MTEF/FSP, saying it breached the Fiscal Responsibility Act, which requires the documents to be submitted by September, and limited the depth of legislative scrutiny.

With disagreements unresolved, Faleke moved a motion for the reports to be stepped down for further work. The House adopted the motion.

Speaker Abbas said the joint committees would revisit the assumptions and return with a revised report the following day.

The Senate approved the MTEF/FSP on Tuesday.