FG Proposes ₦47.9 Trillion Budget for 2025

The Federal Executive Council (FEC) has approved a proposed budget of ₦47.9 trillion for 2025, part of the Medium-Term Expenditure Framework (MTEF) for 2025-2027. This was disclosed by the Minister of Budget and Economic Planning, Atiku Bagudu, during a briefing at the State House after the FEC meeting presided over by President Bola Ahmed Tinubu.

Bagudu explained that the MTEF aligns with the Fiscal Responsibility Act of 2007 and includes key projections such as a crude oil price of $75 per barrel, an exchange rate of ₦1,400 to the dollar, and an estimated oil production of 2.06 million barrels per day. The government also anticipates a 3.19% growth rate by the second quarter of 2024, focusing on addressing inflation and enhancing economic resilience.

Budget Breakdown and Key Objectives

The proposed budget includes ₦9.22 trillion in new borrowings to cover the deficit. According to Bagudu, the government aims to sustain policies such as petroleum price deregulation and exchange rate stabilization. He also highlighted plans to reduce the Nigerian National Petroleum Company Limited’s (NNPC) oil and gas production costs and potentially amend sections of the Petroleum Industry Act 2021 to mitigate risks to the federation.

Bagudu noted that non-oil revenue streams are performing better than anticipated, despite revenue collection and expenditure management challenges. He added that the framework would be submitted to the National Assembly by November 18, alongside the Economic Stabilisation and Tax Reform Bills.

Comparisons and Concerns

In dollar terms, the ₦47.9 trillion budget translates to approximately $27.96 billion, based on an exchange rate of ₦1,679 to $1. This figure is significantly smaller than Nigeria’s 2024 budget of $34 billion and past budgets under former President Muhammadu Buhari, which ranged from $35 billion to $47.39 billion.

A prominent economist, speaking anonymously, expressed concerns about the ambitious nature of the 2025 budget, citing the federal government’s struggles to meet 2024 revenue targets. “The 2024 budget has a significant deficit component. How does one justify moving to ₦47 trillion when revenue performance is already below expectations?” he questioned.

The economist emphasized the dangers of overstretched borrowing, noting that Nigeria’s debt profile has risen dramatically under the Tinubu administration. Data from the Debt Management Office (DMO) shows the national debt grew from ₦87.3 trillion in June 2023 to ₦134.2 trillion by June 2024. “Excessive debt servicing, now climbing to 7-8% of GDP, will only exacerbate macroeconomic instability and fuel inflation,” he warned.

Analyst Opinions

Economic analyst Daniel Wale viewed the proposed budget as a step forward, considering Nigeria’s population of over 230 million. However, he pointed out that on a per capita basis, the allocation remains modest. “At $27 billion, this is essentially the same as last year’s budget in dollar terms,” he noted, urging a focus on achieving realistic revenue targets.

While the proposed budget reflects the government’s aspirations for growth and economic stability, questions remain about its feasibility and potential impact on Nigeria’s debt burden, inflation, and the livelihood of ordinary citizens.