Nigeria’s 2025 Budget: Federal Government to Borrow N13.8 Trillion, Proposes N47.9 Trillion Expenditure

The Federal Executive Council (FEC) has approved a proposed budget of N47.9 trillion for Nigeria’s 2025 fiscal year, which includes a borrowing plan of N13.8 trillion to fund critical projects. This development was announced by the Minister of Budget and Economic Planning, Atiku Bagudu, following the FEC meeting chaired by President Bola Tinubu at the Presidential Villa in Abuja.

The proposed budget is part of the government’s 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), mandated by the Fiscal Responsibility Act of 2007. According to Bagudu, the MTEF and FSP outline key fiscal policies to support Nigeria’s growth, projecting a 4.6% GDP growth rate for 2025, with an oil price benchmark of $75 per barrel and an exchange rate of N1,400 to the dollar. The plan also anticipates oil production at 2.06 million barrels per day.

The government’s borrowing of N13.8 trillion is set to finance infrastructure projects and strategic economic initiatives aimed at boosting growth. Bagudu emphasized that the borrowing is part of a balanced fiscal strategy intended to support spending without overburdening Nigeria’s debt profile. He noted the economy’s resilience, referencing a 3.19% growth rate recorded in the second quarter of 2024, with expectations of continued expansion through targeted reforms to curb inflation and stabilize the economy.

Budget Priorities: Infrastructure, Social Programs, and Development Funds

The proposed budget prioritizes infrastructure development, social programs, and essential national projects. In a first, it also includes contributions to newly established development commissions aimed at fostering social and economic growth at the grassroots level.

Highlighting the government’s efforts to strengthen public finances, Bagudu pointed to improved non-oil revenue streams, with revenue collection exceeding expectations for 2024. The administration aims to finalize the budget before December 2024 to align with its January-December fiscal cycle for increased predictability.

Experts Question Budget Assumptions

Despite these optimistic projections, some financial experts have expressed skepticism regarding the feasibility of the budget’s key assumptions. David Adonri, a market analyst and executive vice chairman at Highcap Securities, questioned the government’s projected 4.6% GDP growth rate and noted the absence of inflation forecasts, which he described as crucial for assessing economic stability.

Tunde Abidoye, head of equity research at FBNQuest Securities, remarked that the projected oil production target of 2.06 million barrels per day is “ambitious,” given Nigeria’s current production levels of around 1.3 million barrels. He also described the projected N1,400 exchange rate as optimistic, given current market pressures.

Port Harcourt-based energy analyst Dr. Bala Zakka advised caution regarding the $75 per barrel oil benchmark, warning of the global oil market’s volatility and the challenges of consistently achieving high production levels.

The proposed budget, with an anticipated N9.22 trillion in new borrowing, has raised concerns about debt sustainability. Public affairs analyst Clifford Egbomeade noted that without effective reforms, including fiscal diversification, achieving the budget’s goals might be challenging, as the reliance on oil revenues makes the economy vulnerable to external shocks.

The 2025 budget proposal and the MTEF/FSP documents will now be forwarded to the National Assembly for review and approval. Bagudu expressed confidence in Nigeria’s economic trajectory, noting that ongoing reforms in petroleum and foreign exchange markets are enhancing stability.

“We are confident that with these strategic investments and policy reforms, Nigeria will continue progressing towards a more resilient and sustainable economy,” Bagudu stated.