The recent decision by President Bola Tinubu to raise Nigeria’s proposed 2025 budget from N49.7 trillion to N54.2 trillion has elicited significant concern among economic experts. While the government attributes the increase to additional revenues from key agencies, economists are questioning the prudence and feasibility of this substantial adjustment.
Recall that on Wednesday, just before he left for France, President Bola Tinubu sent a letter to the Senate on his increase of the proposed 2025 budget from N49.7 trillion to N54.2 trillion, noting that the increase was attributed to additional revenues generated by key government agencies, including N1.4 trillion from the Federal Inland Revenue Service (FIRS), N1.2 trillion from the Nigeria Customs Service, and N1.8 trillion from other government-owned agencies.
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Marcel Okeke, a renowned economist and sustainability expert, criticized the move as “impromptu and economically imprudent.” He emphasized that expanding expenditure without addressing fundamental issues like inflation, debt servicing, and revenue leakages could exacerbate Nigeria’s fiscal challenges. Okeke also expressed skepticism about the sustainability of the projected revenues, warning that unmet targets could lead to increased borrowing, further straining the economy.
Similarly, the Nigerian Economic Society (NES) highlighted concerns regarding the budget’s real value. Despite being the largest in nominal naira terms, the NES noted that due to naira devaluation, the budget’s value in U.S. dollars is the lowest since 2018. This decline in purchasing power could limit the effectiveness of capital investments, potentially hindering infrastructure development and economic growth.
Financial analysts have also raised doubts about the government’s assumptions underlying the budget. The Financial Derivatives Company (FDC) Limited described the inflation target of 15% as overly optimistic, given the current rate of 34.6%. They also questioned the feasibility of the projected 4.6% GDP growth rate, considering recent economic performance and prevailing monetary policies.
Furthermore, experts have challenged the proposed exchange rate of N1,400 to the dollar used in the budget framework. Economists argue that this benchmark may not align with Nigeria’s fiscal and monetary realities in 2025, potentially leading to unrealistic revenue projections and fiscal imbalances.
Meanwhile, speaking to journalists at the Nnamdi Azikiwe Airport in Abuja, the Minister of Budget and Economic Planning, Atiku Bagudu said the increase would also support the federal government’s diversification programme by investing more into the solid minerals sector and infrastructure projects.
As the Senate Committee on Appropriations begins deliberations on the revised budget, these expert opinions underscore the need for a more cautious and realistic approach to fiscal planning. Addressing underlying economic challenges and ensuring sustainable revenue generation are crucial steps toward achieving long-term economic stability.
