President Bola Ahmed Tinubu will tomorrow present a budget proposal of N47.9 trillion for 2025 to a joint session of the National Assembly.
This is even as economic experts have expressed concern over the expected outcomes of poor allocations in the 2025 budget draft. The worries stem from the dollar value of the gross allocations in the coming year.
In terms of real purchasing power, as per the US dollar, the budget is the lowest since 2018.
Compared to the $36.7 billion national budget of 2024, the N47.9 trillion 2025 budget only amounts to $28bn (at the current market rate of N1652.25/$1.
Nigeria’s Federal Executive Council (FEC) approved a total budget proposal of ₦47.96 trillion for 2025.
Minister of budget and economic planning, Atiku Bagudu, disclosed this to State House correspondents after the Council meeting presided over by President Bola Tinubu at the Presidential Villa, Abuja.
The minister said the 2025 financial framework was designed to build on the successes recorded in 2024, and was focused on macroeconomic stability, infrastructure development, and human capital advancement.
Key highlights of the budget include initiatives to boost economic activities in agriculture, housing, and the gas sector, as well as efforts to enhance consumer credit and manufacturing.
The budget projects a total revenue of ₦34.82 trillion, leaving a deficit of ₦13.13 trillion, equivalent to 3.89 per cent of GDP. While the 2025 budget deficit reflects an improvement from the 6.1 per cent inherited from 2023, the expenditure marks a 36.8 percent increase compared to the 2024 estimate.
The framework is based on an oil price benchmark of $75 per barrel, daily oil production of 2.06 million barrels, and an exchange rate of ₦1,400 to the dollar. These projections align with the Medium-Term Expenditure Framework and have already been approved by the National Assembly.
The Federal Executive Council commended the progress made under the Tinubu administration, including achievements in security, infrastructure, and economic diversification.
He said the proposal focuses on consumer credit, the National Agricultural Development Fund, gas, the Compressed Natural Gas initiative, and the housing initiative—all intended to build economic activity and the successes noted in 2024.
“The 2025 framework is based on an oil price benchmark of $75 per barrel, oil production of 2.06 million barrels per day, and the exchange rate of N1,400.
“So the total projected revenue for 2025 stands at ₦34,820,000,000,000 trillion, out of which the expenditure is projected at ₦47,960,000,000,000 trillion, an increase of 36.8 per cent from the 2024 estimate. The deficit for 2025 is projected at N13.13, representing 3.89 per cent of GDP.
“If you recall, this administration inherited 6.1 per cent from the 2023 budget. But given the success achieved in 2024, we were still able to maintain the deficit.
“Comments were taken from the members of the Executive Council, and Mr. President directed some consequential adjustments while approving the figures,” he added.
Meanwhile, economic experts say the 2025 proposed budget could hinder economic growth, undermine infrastructure financing, and reduce allocations to the federal government’s social investment programmes.
Nigeria’s economic growth is driven by petrodollar and external debt financing, which give rise to high external sector vulnerabilities and debt obligations funded in dollars.
For instance, between January and October 2023, Nigeria spent 50 percent (or $3.07 billion) of its total external inflows of $6.11 billion to service external debts. As of Q3 2023, the country’s total external debt was N31.98 trillion ($41.59 billion).
Total imports were $56 billion against total exports of $60.7 billion. This gives net inflows of $4.7 billion, of which $3.07 billion was used to service debt by October.
Economic policy analyst Dr Justine Amase said in terms of economic growth, a lower dollar-value budget for an economy with external sector dominance implies lower public sector capital investment or capital accumulation.
According to him, growth in investment or capital accumulation accounts for a larger share of GDP growth.
But why is this dollar value comparison necessary? President of the Nigerian Economic Society (NES) Professor Adeola Adenikinju said dollar comparison is necessary in view of the external sector dominance of the Nigerian economy, an import-dependent primary production economy.
The nominally bloated 2025 budget expenditure figure results from high inflation and significant naira depreciation.
“The embedded high system liquidity may also feed into more depreciation pressure on the naira in the presence of weak forex reserve buffer stocks, with negative impacts on price and exchange rate stability.
“It is equally apparent that the budget stance and its priorities need to be re-worked to specifically and clearly define its core priorities to achieve implementation traction along explicit lines of fiscal consolidation,” Professor Adenikinju said in a statement to this newspaper.
The economic society believes that adopting an expansionary fiscal stance amid oil subsidy removal and exchange rate deregulation policies may further undermine the Central Bank of Nigeria’s monetary tightening policies to bring down the prevailing high inflation and rising domestic production costs.
Also, Dr Amase said the proposed budget’s debt service of N8.25 trillion (17.49% of total expenditure) will leave the nation with a lower dollar amount to fund growth-enhancing domestic investment.
“In terms of social progress, when juxtaposed with population growth, lowering the dollar component of the budget indicates that while the population is growing consistently, the budgeted dollar component of aggregate expenditure per head is declining.
“This indirectly signals a lower per capita income equivalent, hence weaker capacity for poverty reduction. A smaller dollar-per-capita budget implies lower aggregate expenditure per Nigerian citizens, incorporating the external or dollar component of the expenditure,” Amase said yesterday.
In nominal terms, the 2025 budget is Nigeria’s biggest naira-value budget. As the above dollar values for the 2023 and 2024 budgets indicate, the dollar values for the 2022, 2021, 2020, and 2019 budgets were $39.8 billion (for the 2022 budget of N16.39 trillion); $35.66 billion (for the 2021 budget of N13.6 trillion); $35bn (for the 2020 budget of N10.59 trillion); and $28.80 billion (for the 2019 budget of N8.83 trillion).
The Nigerian Economic Society (NES) says the government should focus on addressing the prevailing weak budgetary processes: weak budget preparation, planning, execution, evaluation, monitoring, and entrenched systemic corruption have resulted in budget padding and over 56,000 projects abandoned across Nigeria.
“The final budget should incorporate measures for eliminating waste, fiscal leakages, preventing non-release of budgeted funds, reducing political pressure for urgent execution of projects without adequate funding, as well as address poor procurement practices, corruption, weak capabilities to plan and execute projects, and lack of continuity in policies and project implementation between successive administrations,” the NES said in a statement.
LEADERSHIP reports that economic experts are unanimous that a higher dollar-value budget leads to more sustainable growth, builds investor and lender confidence in the country’s capacity to meet its ongoing debt obligations, and provides a higher level of cover for its capital account resilience. These factors positively impact employment, income, the exchange rate, and overall economic growth.
Economic actors and experts have charged the federal government to prioritise infrastructural growth as well as deepening focus on the energy sector for quick economic recovery.
The experts who spoke to LEADERSHIP yesterday equally urged the government to cut down on recurrent expenditures and increase funds for developmental projects to ensure that the operating environment becomes friendlier next year.
For his part, the group executive chairman of Lancelot Group, Adebayo Adeleke, who said the government’s earning capacity had reduced drastically in recent times when dollaried by firm volatility, expressed amazement that a huge chunk was going into recurrent expenditure despite shrinking income.
He said, “When you look at the budget closely, some of it is going into recurrent expenditure, debt servicing, and a small portion of it is going into developmental projects. But what we need now is for us to spend money on things that will enhance values for the lifespan of an average Nigerian. Here, infrastructure is key.”
Speaking on the need to address constant national grid collapse to enhance quick economic recovery, he said, “We have seen our national grid collapsing repeatedly in recent times. And for a population of over 200 million, why are we still talking about 5,000 megawatts, which is not even enough for Lagos as a state?
“There is a need for improvement in this area. We need to spend money to solve the power problem. Everything around energy needs to be resolved because that is what this country would depend on. Yes, we are constructing roads, but what of the roads in the hinterlands where farm produce is coming from and even some major roads are deplorable?”
He called for the dismantling of an expanded bureaucratic structure that overloaded the presidential team, thereby increasing expenditures instead of reducing them.
“This consumes a lot of money and leaves little for development. Using 67 per cent of your revenue to service debt, which is the current practice, is unsustainable. Recently, the government sought approval for new loans. The key thing is where the money is going.
“The problem is not implementation; they implement the budget even though there are leakages in the implementation that need to be addressed. The corruption in the value chain of implementation is shooting up the value of the budget, such that half of the proposed funding of a particular project is going into these leakages. This must be addressed for a progressive economy,” he said.
Similarly, the registrar of the National Institute of Credit Administration of Nigeria (NICA), Prof Chris Onalo, said that though he and other Nigerians had no issue with the budget figure, what is of concern to most Nigerians is the implementation of the projects stipulated in the budget.
He said: “People should bother more about implementation; the government needs to be disciplined and carry people along in budget implementation. If the government is aiming to achieve a particular goal in the overall economic space, then it calls for resilience, discipline of the mind and allocation of resources to achieve that.
“You have to make sure a circular is put in place and sent to all government parastatals so that the government will not shift one goal post unless exceptional circumstances occur, such as COVID-19. In the study of credits, there are 5 Cs of credit, and one of them is Circumstance. That is, the circumstances that we cannot do much about and come up to upset the system,” Prof Onalo said.
Other than that, he stressed that the government must use its power to control any obnoxious expenses incurred by any government Ministries, Departments, and Agencies (MDAs).
“If it is a budget of hope, then don’t dash the people’s hope. Let people see you as consciously committed to what you say you will do. That is where integrity and confidence-building come from.
“We don’t want to see the previous recurring decimal where the government announced the budget, and in the first quarter, you see a big gap. Let it begin with this government – by building credibility and reputation in budget management and policy implementation. That is key.
“Government needs to rejig its implementation tools; expenses not captured in the budget should not be implemented. Then, the income captured in the budget, all effort should be put into achieving and even surpassing it. And when you achieve it, declare it to the people,” he added.
