The Senate Committee on Finance has called on the Federal Government to discontinue the current centralised payment system for contractors and replace the envelope budgeting framework, declaring that both mechanisms have failed to deliver effective results.
The committee made the recommendation during an interactive session with the Federal Government’s Economic Management Team led by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun.
Other members of the economic team present at the meeting included the Minister of Budget and National Planning, Senator Atiku Bagudu; the Accountant-General of the Federation, Shamseldeen Babatunde Ogunjimi; and the Chairman of the Nigeria Revenue Service, Zacch Adedeji.
Chairman of the Senate Committee on Finance, Senator Sani Musa, said feedback from Ministries, Departments and Agencies (MDAs) during ongoing budget defence sessions revealed widespread dissatisfaction with the current budgeting and payment structures.
According to him, economic policies introduced by the government have yet to translate into tangible benefits for ordinary Nigerians.
He noted that the envelope budgeting system, which relies on incremental allocations, has outlived its usefulness and should be replaced with a priority- or performance-based budgeting model.
“The envelope system has failed and must give way to a priority-based approach that promotes strategic planning rather than routine expansion of expenditure,” Musa said.
He further criticised the centralised payment system, stating that it has contributed to delays in settling contractors who executed projects in 2024 and 2025.
The committee therefore recommended a return to the former arrangement that allowed MDAs to directly pay contractors engaged for approved projects.
Musa also stressed the importance of restoring discipline to Nigeria’s annual budget cycle, insisting that each fiscal year must be measurable and concluded before a new one begins.
“If by December government cannot realistically assess performance, then the system is not working. We must return to a time-bound and accountable budget process,” he added.
In his contribution, Senator Yahaya Abdullahi (Kebbi North) emphasised that once passed by the National Assembly and assented to by the President, the national budget becomes law and must be implemented accordingly.
He warned that failure to execute an approved budget amounts to illegality, adding that any revenue shortfall should be addressed through provisions of the Fiscal Responsibility Act with legislative approval.
Also speaking, Senator Jimoh Ibrahim (Ondo South) urged the economic team to expand Nigeria’s borrowing capacity, arguing that sustaining engagement with lending markets is necessary for economic growth.
Responding, Minister of Finance Wale Edun defended the country’s debt profile and expressed optimism about the implementation of the proposed N58.472 trillion 2026 budget.
He explained that Nigeria’s current debt stock of about N152 trillion was not entirely due to fresh borrowings.
According to him, about N30 trillion originated from Ways and Means advances inherited by the present administration, while N9 trillion resulted from exchange rate adjustments.
“Additional borrowing since 2023 is in the region of N20 trillion. A significant portion of the debt reflects adjustments rather than new loans,” Edun stated.
He assured lawmakers that future spending would focus on prioritising growth-enhancing projects proposed by MDAs, reviewed by the economic management team, and approved by the President based on national priorities, particularly capital development.
The committee members unanimously urged improved budget planning, efficient implementation, and prompt payment of contractors to restore confidence in government fiscal operations.