Nigerian Economy Reacts to Federal Government’s 2025 Budget Increase
By Femi Oyewale
LAGOS, Nigeria – A wave of reactions has trailed the decision of the Federal Government to increase the 2025 Appropriation Bill from N49.7 trillion to N54.2 trillion, citing additional revenue generated by key government agencies.
On Wednesday, President Bola Tinubu’s letters to the Senate and House of Representatives, detailing adjustments in the yet-to-be-passed budget, were read on the floors of both chambers. Senate President Godswill Akpabio referred the President’s request to the Senate Committee on Appropriations for urgent consideration, assuring that the budget would be passed before the end of February.
Tinubu originally presented a N49.7 trillion budget proposal, themed ‘Budget of Restoration: Securing Peace, Rebuilding Prosperity,’ to the National Assembly in November. The budget is underpinned by projected total revenue of N36.35 trillion, driven by improved non-oil revenue collection, expanded tax enforcement, customs duties, and independent revenues from government-owned enterprises. Oil revenue projections are based on a crude oil benchmark of $75 per barrel, a production target of 2.06 million barrels per day, and an exchange rate of N1,500 per USD.
The budget includes significant allocations to critical sectors and aims to maintain a fiscal deficit of N13.39 trillion (3.96 per cent of GDP), which will be financed through domestic and external borrowings as well as innovative public-private partnership arrangements.
Breakdown of Additional Revenue
The budget increment follows the realization of additional revenue from key government agencies: 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 agencies. The government emphasized that the extra funds would be directed toward strengthening key economic institutions, particularly the Bank of Agriculture and the Bank of Industry. Investments will also be channeled into the solid minerals sector and infrastructure projects to further support economic diversification.
Minister of Budget and Economic Planning, Atiku Bagudu, stated that the adjustment was made after extensive engagements between the executive arm and the National Assembly. “The Senate Committee on Appropriation, Senate Committee on National Planning, and Senate Committee on Finance established that we could generate more revenue by tasking all institutions to increase their contributions,” Bagudu explained.
Mixed Reactions from Economic Experts
Economists and financial analysts have expressed divergent views on the budget expansion.
Renowned economist and sustainability expert Marcel Okeke criticized the adjustment, stating that it was poorly timed. He argued that the changes should have been incorporated into a supplementary budget rather than altering the original budget before its passage.
“The figures that were released in December have already been analyzed and acted upon by global institutions, investors, and analysts,” Okeke stated. “Making last-minute additions portrays a lack of budgetary discipline. It would have been more appropriate to finalize the budget at the right time and introduce necessary changes later via a supplementary budget.”
Chief Economist and Partner at SPM Professionals, Paul Alaje, warned that the increased government spending might derail inflation control efforts. The government is targeting a 15 percent inflation rate in 2025, but Alaje suggested that the expanded budget could stoke inflationary pressures.
“I think it’s straightforward. The government sees additional revenue and believes it can spend more. However, beyond that, there seem to be previously omitted projects that are now being reintroduced into the budget. This level of spending might make the 15 percent inflation target unrealistic,” Alaje cautioned.
Conversely, Tunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited and former president of the Chartered Institute of Stockbrokers, welcomed the development. He asserted that an ambitious budget is essential for infrastructural growth, which is a prerequisite for a productive economy.
“We cannot lift people out of poverty unless we invest in infrastructure. Our budget per capita remains significantly lower than countries with similar demographics. Government spending is crucial in raising the standard of living,” Amolegbe stated. However, he urged fiscal caution, emphasizing that Nigeria must monitor debt-to-revenue and debt-to-GDP ratios to avoid over-leverage.
A leading economist, who spoke on condition of anonymity, criticized the budget increase, suggesting that the widening fiscal deficit—now approaching N16 trillion—could harm the economy.
“With all the borrowing, the government should be looking to reduce the deficit instead of increasing spending. Over the years, we have struggled to meet revenue targets. There is no guarantee we will generate the projected revenue,” the economist stated.
Legislative Support and Next Steps
Despite concerns, the House of Representatives has backed President Tinubu’s proposal, emphasizing that the increase is justified by additional revenue from key government agencies. The budget has been referred to the Committees on Finance and Appropriations for expedited review.
Senate President Godswill Akpabio reassured Nigerians that the budget would be finalized and passed before the end of February, ensuring the government remains on track to implement its 2025 economic plans.
As the legislative process unfolds, the nation remains divided over the implications of the expanded budget. While some see it as an opportunity for enhanced economic growth, others fear it could deepen fiscal instability. The coming weeks will be critical in determining how Nigeria navigates this complex financial landscape.
