Nigeria’s 2025 Budget: Summary and Key Allocations
The Nigerian National Assembly has approved the 2025 budget, totaling ₦54.99 trillion (approximately $36.6 billion), a significant increase from the initially proposed ₦49.7 trillion. Dubbed the “Budget of Restoration,” this budget aims to address key sectors, stimulate economic growth, and enhance public services.
Key Allocations in the 2025 Budget
The approved budget includes the following key allocations:
- Statutory Transfers: ₦3.6 trillion – These are mandatory transfers made to various government agencies and bodies, such as the National Assembly, the Judiciary, and the Universal Basic Education Commission (UBEC). These funds ensure that these institutions function effectively without being subject to direct executive control.
- Debt Service: ₦14.3 trillion – This allocation is set aside to cover Nigeria’s existing debt obligations, including both domestic and external debts. Debt service payments include interest and principal repayments, helping to maintain the country’s creditworthiness and prevent defaults.
- Capital Expenditure: ₦23.9 trillion – Capital expenditure refers to funds allocated for infrastructure projects such as roads, bridges, railways, power generation, and housing. This spending is aimed at fostering economic growth and improving public service delivery.
- Fiscal Deficit: ₦13.8 trillion (3.89% of the estimated GDP) – This represents the shortfall between government revenue and expenditures. The fiscal deficit means Nigeria will need to borrow to cover the gap, which could increase national debt but is often necessary to sustain essential government functions and stimulate economic activities.
Nigeria 2024 Budget vs 2025 Budget
A comparison of the 2024 and 2025 budgets shows significant differences in allocations, spending priorities, and economic projections. The table below highlights key areas of comparison:
| Category | 2024 Budget (₦) | 2025 Budget (₦) | Change (%) |
|---|---|---|---|
| Total Budget | 28.78 trillion | 54.99 trillion | +91% |
| Statutory Transfers | 1.54 trillion | 3.6 trillion | +133% |
| Debt Service | 8.25 trillion | 14.3 trillion | +73% |
| Capital Expenditure | 8.7 trillion | 23.9 trillion | +175% |
| Fiscal Deficit | 11.34 trillion | 13.8 trillion | +22% |
| Oil Price Benchmark | $77.96 per barrel | $75 per barrel | -3.8% |
| Exchange Rate | ₦750/$ | ₦1,400/$ | +86.7% |
The 2025 budget represents a significant increase in capital expenditure, debt servicing, and statutory transfers. However, it also reflects a higher exchange rate and a reduced oil price benchmark, which could affect revenue generation.
Sectoral Allocations and Key Focus Areas
1. Health Sector
A provision of $200 million has been included to mitigate the impact of the recent suspension of U.S. aid to Nigeria’s health sector. These funds will support critical areas such as vaccine procurement and epidemic disease treatments to ensure continued healthcare delivery.
2. Infrastructure Development
A substantial portion of the capital expenditure will be directed toward transportation, power, and housing projects. These investments are expected to improve Nigeria’s infrastructure, create jobs, and boost economic growth.
3. Education Sector
To improve literacy and skill acquisition, the government has allocated funds for the enhancement of educational facilities, teacher recruitment, and the implementation of strategic education programs across the country.
4. Security and Defense
Security remains a top priority in the 2025 budget, with significant allocations made to defense and security agencies. These funds will support counter-insurgency efforts and national security programs aimed at protecting citizens and combating terrorism.
Revenue Generation and Economic Assumptions
The 2025 budget is built on the following economic assumptions:
- Oil Price Benchmark: $75 per barrel
- Oil Production Target: 2 million barrels per day
- Exchange Rate Projection: ₦1,400 per U.S. dollar (stronger than the current official rate)
Tax Reforms and Revenue Strategies
To increase revenue, the Nigerian government has proposed tax reforms, including:
- Raising VAT from 7.5% to 12.5% by 2026, while exempting essential goods.
- Streamlining tax collection and adjusting revenue-sharing models between federal and state governments.
These reforms aim to curb inflation and ensure a more sustainable revenue flow for the government.
Fiscal Deficit and Debt Strategy
Despite the increase in revenue projections, Nigeria faces a fiscal deficit of ₦13.8 trillion. The government plans to finance this deficit through borrowing, raising concerns about increasing national debt levels. However, officials argue that the additional spending is necessary to drive economic development and restore growth.
Conclusion
Nigeria’s 2025 budget reflects the government’s commitment to restoring economic stability while addressing critical sectors like health, infrastructure, education, and security. While the increased allocations aim to improve public services and economic growth, the success of this budget will depend on effective implementation and prudent fiscal management.
With a mix of strategic tax reforms, infrastructure investments, and social sector funding, the 2025 budget holds the potential to steer Nigeria towards sustainable development. However, close monitoring and transparency will be required to ensure that these funds are efficiently utilized