The Nigerian Economic Society (NES) has raised concerns over the proposed ₦47.9 trillion 2025 budget, highlighting its diminished value in dollar terms due to naira devaluation.
Despite being the largest in naira terms, the budget is the lowest in dollar purchasing power since 2018, according to the NES President, Adeola Adenikinju.
At the current exchange rate of ₦1,679/$1, the proposed budget equates to $27.96 billion, a significant drop from the 2024 budget’s $34 billion. Even at the benchmark rate of ₦1,400/$1 used to peg the budget, its $34.14 billion value is still below the 2022 budget’s $39.8 billion.
Adenikinju described the exchange rate assumption of ₦1,400/$1 as ambitious and inconsistent with prevailing fiscal and monetary realities. He projected an average exchange rate of ₦1,850/$1 in 2025, aligning with forecasts from global financial institutions.
Oil Benchmarks and Risks
The NES has recommended revising the oil price benchmark from $75 to $70 per barrel to cushion potential market shocks. The group noted that ongoing geopolitical tensions, increasing U.S. oil production, and the energy transition could push oil prices as low as $40 per barrel by 2025.
The budget’s oil production target of 2.06 million barrels per day is feasible, NES stated, but achieving this will require intensified efforts to combat oil theft and pipeline vandalism.
Budget Deficit Concerns
The proposed budget deficit of ₦13.8 trillion, representing 3.87% of GDP, exceeds the 3% ceiling set by the Fiscal Responsibility Act of 2007. NES emphasised the need for the National Assembly to review previous budgets to establish a realistic deficit target. Current trends suggest the deficit could surpass projections, as seen in 2024, where the deficit had already reached 7.5% of GDP by August.
Addressing Core Socioeconomic Challenges
The NES called for a more effective budgetary framework to address Nigeria’s pressing macroeconomic issues, including inflation, naira volatility, insecurity, and inadequate infrastructure. It noted that the allocation of ₦7.72 trillion to capital expenditure—just 16% of total spending—is far below the 50% recommended for developing nations.
“Low capital investment limits the growth of domestic infrastructure, employment, and poverty reduction efforts,” Adenikinju warned, urging the government to prioritise policies that foster economic stability, job creation, and foreign direct investment.
Way Forward
As global economic uncertainties loom, the NES has stressed the importance of aligning fiscal policy with Nigeria’s macroeconomic realities. A robust budgetary approach, the group stated, could bolster capital accumulation, attract forex inflows, and empower key sectors like agriculture, driving inclusive growth and development in 2025.
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