The proposed 2025 budget, set at ₦47.9 trillion, has already sparked worries among key stakeholders and economists, who argued that the proposed figure does not meet the increasing needs of vital industries including infrastructure, healthcare, and climate efforts. Numerous parts of the budget’s assumptions, including the production level, oil price, and exchange rate, are deemed unrealistic. The budget targets the production of 2.06 million barrels of oil per day, while some analysts think this is unlikely to happen. Some analysts also perceived that the budget’s pegged exchange rate of ₦1,400 to the dollar is overly optimistic.
Economic experts noted that despite the fact that its nominal worth has increased dramatically, the 2025 proposed budget has dropped by 18.25% in dollar terms in comparison to the 2022 budget. While the 2022 ₦17.12 trillion approved budget was calculated using the ₦410.15/$ exchange rate, which translated to $41.76 billion, the government fixed the exchange rate for the next year’s budget at ₦1,400/$, making it $34.14 billion in dollar terms. Even the 2024 budget was ₦28.78 trillion, or $35.97 billion at a dollar rate of ₦800/$.
Performance of the budget depends on inflation control.
Nigeria now has a debt-to-GDP ratio of about 7.5, up from about 3.26 in the 2024 budget. The long-term viability of the budget, according to some observers, will depend heavily on the government’s capacity to manage debt. Its performance also depends on efficient Revenue generation, project execution and the effective control of Inflation which may reduce the budget’s purchasing power. The benchmark price of $75 per barrel for crude oil and the naira’s peg of ₦1,400 to the dollar are major issues since they might not accurately represent global conditions. While the budget proposes 6.4% GDP growth, it relies on borrowing ₦9.2 trillion to make up the deficit.
This overwhelming forecast in the new budget proposal has led to comparisons with the approved budget of $28.7 trillion for 2024, which also had large deficits. The budget proposal for 2025 is an increase of almost 66.9% from 2024. Although it looked robust on paper, Inflationary Pressures and higher-than-expected spending on social services and catastrophe recovery prevented it from meeting its objectives. The government had a ₦6.2 trillion supplementary budget to close the gap, increasing the year’s total allotment to ₦35 trillion
Government may need supplementary allocation by mid-2025.
Even with this adjustment, significant social Welfare and Infrastructure projects were delayed as actual spending needs exceeded both the initial and updated budgets. According to stakeholders, the proposed budget for 2025 runs the risk of experiencing the same situation as last year. These worries are exacerbated by the fact that 2025 GDP growth is only expected to reach 2.1%, a decrease from 2024’s 2.8% growth rate. Since inflation is predicted to stay over 30%, the suggested allocations’ purchasing power will probably continue to decline, making it more difficult to meet stated objectives.
Economists caution that if the budget is not modified to account for these realities, it may be necessary to make yet another supplemental allocation by the middle of 2025, which would put additional strain on the government’s limited resources. Many stakeholders are skeptical of the government’s capacity to efficiently plan and oversee its fiscal priorities as a result of the 2024 experience. Public trust in the administration’s fiscal plan was damaged by crucial projects that received little funding or were delayed, even with the supplemental budget. The administration is under increasing pressure to adjust its strategy before the fiscal year starts, as the 2025 budget already seems inadequate.
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Without significant adjustments, experts further cautioned the the nation may experience stagnation in vital areas of development, which would have serious repercussions for both public welfare and economic stability. Similarly, the Nigerian Economic Society (NES) cautioned that the expanded budget may worsen inflation, create fiscal deficits, and cause further economic instability unless there are substantial measures to increase revenue generation, cut unnecessary expenditure, and promote transparency. The society urged the government to consult with experts and stakeholders to review the budget, stressing the importance of strategic spending, realistic estimates, and an emphasis on long-term economic growth.