The Federal Executive Council (FEC) on Wednesday approved a N47.9 trillion budget proposal for the 2025 fiscal year, alongside a borrowing plan of N13.8 trillion. This was announced by the Minister of Budget and Economic Planning, Atiku Bagudu, following a Council meeting presided over by President Bola Tinubu at the Presidential Villa in Abuja.
The approved budget proposal forms part of the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper for 2025-2027, as mandated by the Fiscal Responsibility Act of 2007. Bagudu disclosed that the framework would be presented to the National Assembly either on Friday or Monday, in line with legal requirements.
Bagudu highlighted key parameters guiding the 2025 budget, including a projected Gross Domestic Product (GDP) growth rate of 4.6%, an oil price benchmark of $75 per barrel, and an exchange rate of N1,400 to $1. The government expects oil production to reach 2.06 million barrels per day (mbpd).
To finance key infrastructure and economic initiatives, the government plans to borrow N13.8 trillion, representing about 3.87% of the GDP. Bagudu explained that the borrowing aligns with a strategic approach to balancing government spending and managing public debt sustainably.
“The Nigerian economy is showing signs of resilience, with a recorded growth rate of 3.19% in the second quarter of 2024,” Bagudu stated, expressing optimism about continued growth into 2025, supported by efforts to curb inflation and stabilize critical economic sectors.
Budget Focus and Fiscal Strategies
Bagudu emphasized that the government’s fiscal policies are designed to enhance economic resilience, reduce inflation, and stimulate growth through targeted initiatives. He noted that the implementation of the 2024 budget was on track, with revenue collection and spending showing progress despite certain delays.
The proposed N47.9 trillion budget for 2025 prioritizes infrastructure, social programs, and essential national projects. For the first time, it also includes allocations to newly established or soon-to-be-established development commissions aimed at grassroots economic development.
Bagudu assured that the 2025 budget would be passed and signed into law before December 2024, to maintain a consistent January-December budget cycle.
The FEC also endorsed the 2025-2027 MTEF and Fiscal Strategy Papers, which lay out long-term fiscal policies aimed at fostering sustainable economic growth. Bagudu described these documents as a roadmap for public finances, ensuring that growth targets are met and economic stability is maintained.
Bagudu expressed confidence that the government’s macroeconomic policies, including market-driven pricing for petroleum products and foreign exchange, were helping to stabilize the economy. “Our fiscal efforts are on track, and we are committed to fostering a more resilient and sustainable economy,” he said.
Mixed Reactions from Experts
However, some economic experts expressed reservations about the budget’s underlying assumptions. David Adonri, Executive Vice Chairman at Highcap Securities Limited, criticized the government for not providing a report on the performance of previous budgets while seeking approval for a new one. He questioned the feasibility of a 4.6% GDP growth rate and highlighted concerns about inflationary pressures.
Adonri also raised issues with the oil price forecast, citing uncertainties due to potential changes in the global oil market. “Basing the budget on a crude oil-driven economy shows a lack of departure from past economic policies,” he remarked.
Tunde Abidoye, Head of Equity Research at FBNQuest Securities, described the oil production target of 2.06 mbpd as ambitious given current production levels of about 1.3 mbpd. He also expressed skepticism about the exchange rate and GDP growth projections amid existing economic strains.
Similarly, Clifford Egbomeade, a public affairs analyst, described the budget targets as ambitious, noting that steady oil production and economic diversification would be necessary for success. He raised concerns about the projected exchange rate, which he warned could exacerbate inflation.
Energy analyst Dr. Bala Zakka cautioned against setting overly optimistic oil price and production benchmarks, stressing the need for stakeholders to increase Nigeria’s production capacity.
Experts concluded that achieving the budget’s goals would require effective fiscal reforms and greater diversification of the economy to reduce reliance on oil revenue and improve overall economic resilience.
