Why 2025 Budget Is Inadequate to Tackle Nigeria’s Economic Challenges – Atiku

Former Vice President Atiku Abubakar has criticized Nigeria’s proposed 2025 federal budget, describing it as inadequate for fostering sustainable economic growth or addressing the nation’s entrenched challenges. In a statement issued on Sunday, Abubakar warned that the budget reflects a continuation of fiscal practices that have increased reliance on debt, threatening economic stability.

The N48 trillion budget projects revenue of N35 trillion, leaving a deficit of over N13 trillion, equivalent to 4% of GDP. Abubakar criticized the government’s plan to finance this shortfall through N13 trillion in borrowings, including N9 trillion in direct loans and N4 trillion tied to specific projects. He described this borrowing strategy as consistent with past APC-led administrations, arguing that it exacerbates public debt and heightens risks related to interest payments and foreign exchange exposure.

“The 2025 federal budget reflects a continuation of business-as-usual fiscal practices,” he said. “This trend of persistent budget deficits and increasing reliance on external borrowing has characterized the APC-led administration since 2016.”

Abubakar pointed to foundational weaknesses in the budget, including its poor execution record. He noted that by the third quarter of 2024, less than 35% of allocated capital expenditure for ministries, departments, and agencies (MDAs) had been disbursed, despite government claims of 85% budget execution. This underperformance, he said, raises doubts about the feasibility of the 2025 budget’s capital spending targets, which are critical for economic transformation.

Debt servicing, which accounts for N15.8 trillion (33% of the total expenditure), also drew criticism from Abubakar. He noted that this figure is nearly equal to the planned capital expenditure of N16 trillion (34%), and far exceeds spending on priority sectors like defense (N4.91 trillion), infrastructure (N4.06 trillion), education (N3.52 trillion), and health (N2.4 trillion). He warned that such an imbalance risks crowding out essential investments and perpetuating a cycle of rising borrowing and debt accumulation.

Abubakar also flagged the government’s high recurrent expenditure, which amounts to over N14 trillion (30% of the budget). He called it disproportionately high, attributing it to an oversized bureaucracy and inefficient public enterprises. He urged the government to take concrete steps to curb waste and enhance spending efficiency, stressing that such inefficiencies leave limited resources for development.

He further criticized the low level of capital investment, which he said, at 25-34% of the total budget, is insufficient to address Nigeria’s infrastructure deficit or stimulate growth. With a per capita capital allocation of approximately N80,000 ($45), he argued, the budget fails to meet the demands of a country struggling with slow economic growth and infrastructural underdevelopment.

Additionally, Abubakar condemned the administration’s decision to increase VAT from 7.5% to 10%, describing it as a regressive measure that will exacerbate the cost-of-living crisis and hinder economic growth. He said that imposing higher taxes on an already struggling populace, while failing to address inefficiencies in governance, risks deepening economic hardship.

In conclusion, Abubakar described the 2025 budget as lacking the structural reforms and fiscal discipline necessary to address Nigeria’s economic challenges. “To enhance the budget’s credibility, the administration must prioritize the reduction of inefficiencies in government operations, tackle contract inflation, and focus on long-term fiscal sustainability rather than perpetuating unsustainable borrowing and recurrent spending patterns,” he said. Abubakar emphasized the need for a more disciplined and growth-oriented fiscal policy to guide Nigeria toward economic recovery.