The Federal Government has moved to strengthen economic forecasting and improve the credibility of macroeconomic assumptions underpinning the preparation of the 2027 Budget.
The move followed a Macroeconomic Data and Assumptions Validation Workshop convened by the Federal Ministry of Finance and the Federal Ministry of Budget and Economic Planning on August 29, 2026.
The workshop brought together key fiscal and monetary data institutions across government to review the quality of economic data and assumptions used for budgeting and economic management.
The government said the initiative which would involve stress test is aimed at ensuring that national economic planning was based on credible data, realistic assumptions and transparent methodologies.
A stress test is a way of checking how well a plan, system, or financial position would perform under difficult or unexpected conditions.
For the 2027 Budget, it means the government would test its economic assumptions against scenarios such as lower crude oil prices, reduced oil production, lower government revenue, higher inflation, exchange-rate depreciation, and higher interest rates among others.
A review of previous budget cycles revealed significant gaps between some macroeconomic projections and actual outcomes, particularly in the areas of crude oil production and revenue.
The government noted that the discrepancies had highlighted the need for stronger forecasting mechanisms, better coordination among relevant institutions and measures to reduce optimism bias in future budgets.
As part of the resolutions reached at the workshop, the government agreed to establish a Standing Committee on Macroeconomic Data and Assumptions.
The committee will be responsible for validating key economic data and assumptions, continuously reviewing them and reporting its findings to the Economic Management Team.
The government will also establish a central data repository to ensure that Ministries, Departments and Agencies work with a single and consistent set of economic data and assumptions.
Another key resolution was the development of a unified national data reporting framework containing standard definitions for revenue, expenditure and borrowing.
The framework is expected to address inconsistencies in the way government institutions report key fiscal and economic indicators, thereby improving the quality of information used for policymaking.
The government further resolved to strengthen coordination between fiscal and monetary authorities while improving the timeliness and quality of national statistics.
Particular attention will be paid to employment, productivity and producer-price data, which are considered important for assessing economic performance and developing realistic policy projections.
The assumptions underpinning the Medium-Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) and the annual Budget will also be subjected to stronger methodological reviews.
The process will include sensitivity analysis and scenario testing before the assumptions are finalised.
The government said the measures were part of its broader efforts to improve fiscal transparency, accountability and evidence-based economic management.
It noted that stronger forecasting would enable policymakers to better anticipate changes in economic conditions and reduce the risk of significant deviations between budget projections and actual performance.
The workshop also underscored the importance of closer collaboration among institutions responsible for producing and using economic data.
The government maintained that reliable data was critical to developing credible macroeconomic assumptions, while realistic assumptions were essential for effective fiscal planning and resource allocation.
The reforms are expected to strengthen the preparation and implementation of future budgets by ensuring that key projections are subjected to greater scrutiny before they are adopted.
The Federal Government said improved data quality, forecasting and coordination should ultimately contribute to better economic decisions and improved outcomes for Nigerians.
