2025 Proposed Budget: Bold Framework for Economic Recovery
Gbenga Olumuyiwa
The federal government has unveiled its ambitious fiscal plan for 2025, aiming for a fiscal deficit of 3.96 percent of GDP and projected revenue of N36.35 trillion. This comprehensive framework underscores the Tinubu administration’s commitment to reshaping Nigeria’s economic landscape and laying the groundwork for a prosperous future.
The government plans to generate N36.35 trillion in revenue, with a clear focus on broadening its non-oil revenue base. Key drivers include:
•Taxation and Reforms: Enhanced efficiency in tax collection and an expanded tax base are expected to boost revenues from taxes, customs duties, and independent sources.
• Oil Revenue: Oil income remains pivotal, anchored on a benchmark crude oil price of $75 per barrel, a production target of 2.06 million barrels per day, and an exchange rate of N1,500 per US Dollar. These projections reflect the government’s focus on stabilizing oil production while addressing pipeline vandalism and crude theft.
Expenditure Framework: Prioritising Growth-Enabling Investments
The total expenditure for 2025 is estimated at N49.7 trillion, with allocations strategically aligned to Nigeria’s development priorities:
• Security: Increased investment in defense and law enforcement to address internal security challenges, creating a safer environment for business and investment.
• Infrastructure Development: Significant funding is earmarked for completing critical road, rail, and power projects, which are key to reducing business costs and enhancing economic growth.
• Social Services: Education and healthcare funding are set for significant increases, focusing on improving access and quality to strengthen Nigeria’s human capital.
Fiscal Deficit and Financing: Balancing Risks with Opportunities
The fiscal deficit of 3.96 percent of GDP, amounting to N13.39 trillion, surpasses the three percent threshold of the Fiscal Responsibility Act. However, the government argues this is a necessary trade-off to fund critical infrastructure and social programs.
• Domestic Borrowing: The deficit will be primarily financed through domestic debt to minimize foreign exchange risks.
• External Loans: Concessional external borrowing with favorable terms will also supplement funding.
• Public-Private Partnerships (PPPs): The government aims to leverage private sector capital to execute large-scale infrastructure projects.
Economic Reforms and Strategic Focus: Strengthening the Fiscal Foundation
To ensure the success of its fiscal agenda, the administration is implementing key reforms:
1 Tax and Revenue Reforms:
• Expanding the tax base through digital platforms and data-driven compliance.
• Empowering the Federal Inland Revenue Service (FIRS) to enhance revenue efficiency.
2. Fuel Subsidy Removal:
• Redirecting savings from subsidy removal into targeted social investment programs to cushion the impact on vulnerable populations.
3 Debt Sustainability:
• Ensuring debt servicing remains within manageable limits and focusing borrowed funds on productive sectors to drive growth.
Conclusion: Bold Steps Toward Economic Recovery
The revenue targets for 2025 are ambitious but attainable with the effective execution of the outlined reforms. Prioritising non-oil revenue and investing in infrastructure signal a decisive shift toward fiscal sustainability and economic diversification.
While the proposed framework positions Nigeria for long-term stability, its success depends on transparent governance, timely project execution, and stakeholder collaboration. As the National Assembly reviews the proposal, Nigerians await a budget capable of delivering on its promise to secure the nation’s future and catalyze enduring prosperity.
Olumuyiwa, a Policy and Public Affairs Analyst in Abuja
