The federal executive council (FEC) has unveiled a proposed budget of N47.9 trillion for the 2025 fiscal year.
Atiku Bagudu, Minister of Budget and Economic Planning, disclosed this to journalists on Thursday following the Federal Executive Council (FEC) meeting chaired by President Bola Tinubu.
Bagudu revealed that the council had approved the Medium-Term Expenditure Framework (MTEF) for 2025-2027.
According to the minister, the government has pegged the crude oil benchmark at $75 per barrel, with an oil production target of 2.06 million barrels per day (bpd).
The budget also sets the exchange rate at N1,400 per dollar and aims for a gross domestic product (GDP) growth rate of 6.4%.
“And equally, the fiscal objectives were conservative, because we want to ensure that we study the course much as we believe the projections will be exceeded. The budget size that was approved for presentation to the National Assembly in the MTEP is N47.9 trillion, with new borrowings of N9.2 trillion to finance the budget deficit in 2025.
“We need to sustain the market deregulation, commendable market deregulation of petroleum prices and exchange rate, and to compel the Nigerian National Petroleum Corporation Limited to lower its oil and gas production cost significantly, and even to consider the need to amend the relevant sections of the petroleum industry act 2021 to address the significant risk to Federation.
“The Federal Executive Council approved the Medium-Term Expenditure Framework and the physical strategy paper, and it will be submitted to the National Assembly. This in addition to bills that are already at the National Assembly, the economic stabilization bills and tax reform bills, which we believe we will have a very, very strong growth in 2025,” Bagudu said.
During the meeting, the FEC also approved its submission to the National Assembly as required by the 2007 Fiscal Responsibility Act.
Highlights of Proposed 2025 Budget Estimates (based on MTEF)
A. FG Revenue Target: N34.8 trillion which is further broken down into
- Oil revenue target of N19.6 trillion
- FG Share of non-oil taxes of N5.7 trillion
- Net Revenues from GOEs of N2.87 trillion
- Independent Revenue of N3.6 trillion
- Others of N4.8 trillion
B. FG also targets an expenditure of N47.9 trillion for the period
- Recurrent (non-debt) expenditure of N14.2 trillion
- Aggregate Capital Expenditure of N16.4 trillion
- Debt Service of N15.38 trillion
- Others of N2 trillion
According to the MTEF, the budget deficit is projected to be N13.08 trillion in 2025, from N9.18 trillion estimated for 2024.
This represents about 38% of total FGN revenues and 3.87% of the estimated GDP. The deficit is due to the increased new minimum wage, pension obligation, other consequential adjustments, and increased debt costs.
What you should know
In 2024, the federal government’s budget was presented with ambitious targets, under the theme “Renewed Hope.”
Initially set at N27.5 trillion (around $36.7 billion based on a N1/$700 exchange rate), the budget aimed to balance government spending against projected revenues.
However, the figures also revealed a substantial budget deficit of N9.18 trillion (approximately $12.2 billion), suggesting that the government planned to cover this gap through borrowing, external financing, or other fiscal mechanisms.
Key Budget Components of the 2024 budget included
- Projected Revenue:
The government targeted N18.32 trillion in revenue (around $24.4 billion) based on the exchange rate benchmark of N1/$700.
- Oil Revenue:
The government projected N7.68 trillion from oil, a crucial revenue source for Nigeria, given the country’s heavy dependence on crude exports. This forecasted oil revenue was a significant part of the overall revenue target, but it was vulnerable to fluctuations in global oil prices, production volumes, and other market dynamics.
However, due to the country’s declining oil output and the further devaluation of the naira, both budget expenditures increased, while revenue shortfalls widened.
Recent figures showed a budget deficit of 7.6% of GDP as of August 2024, outpacing the approved 3.8% target for the year.
The federal government said it plans to issue foreign currency-dominated bonds to help finance the budget deficits.
