Nigeria Proposes Record N47 Trillion Budget for 2025 Amid Struggles to Fund 2024 Expenditure

The Nigerian government, led by President Bola Tinubu, has announced a historic N47 trillion budget proposal for 2025, despite significant challenges in funding the current N27 trillion 2024 budget. This proposed figure excludes spending by state and local governments, as Nigeria operates a federal system where each level prepares its own budget.

Revenue Projections and Oil Dependency

According to government details, the crude oil benchmark for 2025 is set at $75 per barrel, with an anticipated daily production of 2.06 million barrels. Oil revenue is expected to remain the primary source of income, reflecting historical trends.

For the 2024 budget, oil revenue was projected at N7.94 trillion, accounting for 43.3% of the federal government’s total estimated revenue of N18.32 trillion. Non-oil revenue was pegged at N3.52 trillion, while independent and other sources were estimated to contribute N6.86 trillion.

The government is also targeting a GDP growth rate of 6.4% and has pegged the 2025 exchange rate at N1,400 to $1, up from N750 in 2023.

Challenges in Meeting Revenue Targets

Despite optimistic projections, Nigeria continues to grapple with funding shortfalls. The Central Bank of Nigeria (CBN) reported that as of Q2 2024, the federal government earned only N2.3 trillion but spent N6 trillion, with N4 trillion allocated to debt servicing.

Between June 2023 and June 2024, Nigeria’s debt profile surged by N46.9 trillion, with a staggering N13 trillion increase recorded between March and June 2024 alone. These borrowing levels highlight the nation’s ongoing struggles with poor revenue collection and rising fiscal deficits.

Oil Production Discrepancies

The government has set a production target of 2.06 million barrels per day for 2025, an increase from the 1.78 million barrels projected for 2024. However, data from OPEC and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) casts doubt on these figures.

In September 2024, Nigeria’s actual crude oil production stood at 1.3 million barrels per day (or 1.5 million including blended and unblended condensates), falling short of the 2024 target. January 2024 saw the highest production levels at 1.4 million barrels per day (1.6 million with condensates).

Record-Breaking Budget Amid Revenue Concerns

The N47 trillion budget proposal is the largest in Nigeria’s history and nearly double the 2024 budget. For context, past budgets were N27.5 trillion in 2024, N20.5 trillion in 2023, and N17.12 trillion in 2022.

While devaluation of the naira is part of the government’s strategy to boost revenue, it remains unclear how the administration intends to bridge the gap between revenue generation and its ambitious spending plan.

The proposed budget raises concerns about how Nigeria will meet its targets, especially given its historical challenges with revenue collection and the escalating debt burden.