Nigerian President Bola Tinubu has unveiled a record 2025 budget, banking on increased oil revenue to fund 49.7 trillion naira ($32 billion) in planned expenditure. The government expects to generate 34.8 trillion naira in revenue, leaving a deficit of 13.1 trillion naira (3.9% of GDP), to be financed through local and international borrowing.
The budget forecasts a 4.6% GDP growth rate in 2025 — the fastest in a decade — and anticipates inflation easing to 15% from the current 34%. These estimates are more optimistic than the IMF’s 3.2% and the African Development Bank’s 3.7% growth projections.
“This is an ambitious but necessary budget to secure our future,” Tinubu said while addressing lawmakers in Abuja. Since taking office in May 2023, he has introduced major reforms, including the devaluation of the naira, the removal of a complex multiple exchange rate system, and the elimination of petrol subsidies. While these measures have garnered support from the IMF and World Bank, rising inflation has worsened the living conditions for over half of Nigerians living below the poverty line.
Tinubu pointed to $5 billion in foreign investments in the oil and gas sector and aims to attract $10 billion in additional deep-water gas exploration through tax incentives. Education, healthcare, and social services received record allocations in the budget, while 15.8 trillion naira is earmarked for debt servicing.
Revenue assumptions are based on an oil price of $75 per barrel and daily production of 2.06 million barrels. However, analysts remain sceptical, noting Nigeria’s recent struggles to meet OPEC targets. Last month, the country produced 1.5 million barrels per day, and Brent crude traded at $73.5 on Wednesday.
“The reliance on oil revenue remains risky due to market volatility and Nigeria’s lack of economic diversification,” said Ikemesit Effiong, a partner at SBM Intelligence. He added that exchange-rate instability poses additional challenges for the budget’s implementation.
Ayodeji Dawodu, director at BancTrust & Co., cautioned that the deficit might exceed projections, warning it could fuel inflation and weaken the naira further. He suggested this could be the government’s last opportunity to address the fiscal deficit before the 2027 election cycle.
Tinubu pledged to increase revenue-to-GDP ratios and reduce wasteful spending to ensure fiscal sustainability.
Credit: Bloomberg (Text Excluding Headline)
