The Federal Government has reaffirmed its commitment to leveraging innovative financing mechanisms to address the projected N14 trillion budget deficit for the 2025 fiscal year.
This was made known on Monday by the Minister of Budget and National Planning, Atiku Bagudu.
Speaking on 2025 KPMG Arise TV Budget News Day on Arise TV, Bagudu highlighted the administration’s strategy for debt management and revenue mobilization, ensuring that the country maintains fiscal stability while avoiding excessive reliance on the Central Bank of Nigeria (CBN) for deficit financing.
Bagudu emphasized that under no circumstances would the CBN provide financing beyond its legal limit of 5% of the previous year’s revenue, in line with the legal requirements of the Central Bank of Nigeria. Instead, the government will prioritize market-driven approaches to raise funds.
“On the deficit, we are looking at N14 trillion. Given what we have seen in the innovative approach to financing, first, because you don’t have a Central Bank of Nigeria that will be going beyond the legal bit of 5%, we are looking at market solutions. We are going to the market in different ways using innovative financing techniques,” he stated.
Exploring Innovative Financing Options
To bridge the funding gap, the government is exploring local bond issuances and other structured financial instruments that will allow it to raise capital from investors while ensuring sustainability in debt servicing.
“Innovative approaches such as local bonds have been issued, allowing the government to raise money efficiently. This represents a strong statement of intent, ensuring that those whom we have borrowed from remain confident in our ability to meet debt obligations,” Bagudu explained.
The minister also expressed optimism that economic conditions will continue to improve in 2025, potentially reducing the need for extensive debt servicing.
“If, as we anticipate, economic conditions continue to improve, we may not need to spend as much on debt servicing as previously projected,” he noted.
Bagudu reaffirmed that President Bola Tinubu’s administration remains committed to fiscal responsibility, with a strong focus on revenue generation through tax reforms, public-private partnerships (PPPs), and investment in productive sectors.
More insights
In February 2025, President Tinubu signed the N54.99 trillion 2025 appropriation bill into law, marking a 99.96 percent increase from the 2024 budget of N27.5 trillion.
- The bill was approved by the National Assembly on February 13 after revisions to Tinubu’s initial budget proposal of N49.7 trillion.
- N14.32 trillion, debt servicing accounts for a significant portion of the budget, which could impact funds available for infrastructure and social programs.
President Tinubu assured Nigerians during the budget presentation of his commitment to reducing Nigeria’s inflation rate from 34.6% to 15% by the end of 2025.
