The Federal Executive Council (FEC) yesterday approved the Medium-Term Expenditure Framework for 2025-2027 with a proposed budget of N47.9 trillion for the year 2025.
This was disclosed by the Minister of Budget and Economic Planning, Atiku Bagudu, while briefing State House correspondents at the end of the FEC meeting presided over by President Bola Ahmed Tinubu.
The minister said the approval is part of the “Medium Term Expenditure Framework (MTEF) for 2025-2027, in accordance with the Fiscal Responsibility Act of 2007”.
Bagudu also disclosed that FEC pegged the price of crude oil at $75, exchange rate at 1400 Naira to a dollar and projected oil production of 2.06 million barrels per day.
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The minister added that with the growth rate of 3.19%, which is expected in the second quarter of 2024, the federal government will continue to tackle inflation, strengthen economic resilience and provide more support for the economy.
According to Bagudu: “The budget size approved for presentation to the National Assembly in the MTEF is N47.9 trillion, with new borrowings of N9.22 trillion to finance the budget deficit in 2025. We aim to sustain the commendable market deregulation of petroleum prices and the exchange rate, compel the Nigerian National Petroleum Company Limited to significantly lower its oil and gas production costs, and potentially amend relevant sections of the Petroleum Industry Act 2021 to address key risks to the federation.”
He further said, the approval included a review of the 2024 budget implementation, promising progress in revenue collection and expenditure management, despite lags in pro-rated targets.
“The overall trajectory shows that fiscal efforts are on track with key non-oil streams performing better than anticipated,” he said.
The minister added that the government will continue to tackle inflation, strengthen economic resilience, support the vulnerable and rebuild this economic buffer and render support to high employment generation sectors, improve the business environment and ensure effective implementation of youth development and social investment programmes.
Bagudu said the overall trajectory shows that fiscal efforts are on track in the non-oil streams, performing better than anticipated.
He also said FEC approved the medium term expenditure framework which is expected to be submitted to the National Assembly, adding that: “This is in addition to bills that are already at the National Assembly; the economic stabilisation bill and tax reform bills.”
The framework is expected to be transmitted to the National Assembly today, November 15 or Monday, November 18.
Nigeria’s budget in dollar terms
The 2025 proposed budget of N47 trillion in $ ($1/N1,679) translates to $27.96 billion, smaller than the 2024 budget of $34 billion.
In dollar terms, it is far smaller to those of the immediate past administration of President Muhammadu Buhari. Based on the prevailing exchange rate, Buhari’s administration in 2020 budgeted -$35 billion, 2021 -$35.66 billion, 2022 -$41.77 billion and 2023 -$$47.39 billion
What experts are saying
A renowned economist who prefers anonymity, in his reaction, said the 2024 budget of N28 trillion has a huge deficit component and that, that of 2025, is too ambitious.
He said the federal government needs to properly review the budget performance of 2024 to determine the deficit size and what will be an appropriate figure.
He said: “So far, the figures that have been released show that we are not meeting revenue targets. How did you move to N47 trillion? How are you going to fund it?
“We are almost over stretched in terms of debt. The debt has been climbing, almost to a level that is not sustainable.
“If you are projecting for revenue, you have to be as conservative as possible, so that you don’t spend on assumptions that are not realistic or sustainable, thereby creating more micro economic problems.”
The economist further argued that the proposed 2025 budget would end in a bigger deficit and contributes to micro instability and the ordinary man will suffer for it because it will fuel inflation.
Nigeria’s debt profile grew by a record N46.9 trillion under Tinubu
According to the Debt Management Office’s (DMO) data, as of June 2023, when Tinubu became Nigeria’s president, the country’s debt profile stood at N87.3 trillion. It, however, grew to N134.2 trillion as of June 2024.
Speaking to the dollar value of the budget, the expert said: “We are relating to Naira; what is the business of the budget with the dollar? What we are talking about is how much of your revenue target you are able to meet”.
He said: “Our debt service as a function of GDP is already climbing to about 7 to 8 per cent. The target was about 3.6 per cent. If there is no revenue and you have such deep spending, we will continue to create a problem of debt.
“In terms of the size of the budget and the size of the economy, it is small, but whatever it is, your revenue should determine the kind of expenditure you will put on the table”, he said.
Another analyst, Daniel Wale said: “₦48 trillion, which is about $27 billion for over 230 million people is an encouraging leap.”
He said on a budget per capita basis, the amount is not really much.
“If you look at this budget very well, you will notice that it is actually just about last year’s budget in dollar value”, Mr. Wale said.
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