An economist and CEO of SPM Professionals, Dr. Paul Alaje, has expressed doubts about President Bola Tinubu’s 15% inflation target for Nigeria’s 2025 budget, warning that it is unrealistic unless there are significant changes in the country’s policy environment.
Alaje made this statement during an appearance on Channels Television’s Sunrise Daily program on Monday, where he critically analyzed Tinubu’s proposed ₦49.7 trillion budget for 2025.
He noted that achieving such an ambitious inflation target would be highly improbable given the current economic policies in place.
“So, we might not see the 15% that we wish to see because it is a mere projection. I doubt if that projection is subjected to econometric number to project what the future will look like; what the impact will look like, I doubt very much. “Some aspects of the budget are realistic but there are some aspects in the budget that I have a lot of doubts about whether they would be realistic or not,” he said.
“Check the 2025 Budget, the government is looking at 15% inflation rate. I doubt it very much,” Alaje said. “If the policy environment remains unchanged, there’s no way inflation can dip that drastically.”
President Tinubu’s 2025 budget presentation, made on December 18, 2024, projected a reduction in inflation from the current rate of 34.6% to 15% in the coming year. The proposed budget, which is about ₦22 trillion higher than that of 2024, includes significant allocations for defense and security (₦4.91 trillion), infrastructure (₦4.06 trillion), health (₦2.4 trillion), and education (₦3.5 trillion), among other sectors.
Despite these ambitious plans, Alaje remains skeptical about the feasibility of these projections, especially the inflation target.
When Tinubu assumed office in May 2023, Nigeria’s inflation rate stood at 22.41%, according to the National Bureau of Statistics (NBS). However, inflation surged to an alarming 34.6% by November 2024, a rise many economists attribute to the president’s controversial policies, including the removal of the petrol subsidy and the unification of the country’s foreign exchange rates.
Despite these challenges, President Tinubu’s budget speech projected optimism, not only for inflation but also for the exchange rate, which he believes will improve from ₦1,700 per dollar to ₦1,500 per dollar by 2025.
Alaje, however, is less optimistic about these targets. He emphasized that based on current economic conditions, he expects inflation to remain in the 30% range in 2025. “If I tell you what the econometric numbers are saying, based on the current policy environment, if the policy environment changes, it may improve. But if it stays the same, we are likely to remain within the 30% corridor,” he explained.
He further questioned the validity of the 15% inflation target, suggesting that it might not be grounded in realistic economic modeling. “I doubt very much that this projection is subjected to any econometric analysis or modeling to determine what the future holds. It seems to be more of a hopeful projection rather than one based on solid economic data.”
While Alaje acknowledged that certain elements of the 2025 budget were realistic, he expressed concerns about others, particularly the inflation and exchange rate targets, which he believes could prove difficult to achieve given the current economic landscape.
Bringing down inflation with FDI
Earlier, a renowned economist and CEO of Economic Associates (EA), Ayo Teriba, said that Nigeria’s inflation rate can be driven down to 5% by 2025 if the Federal Government successfully attracts $50 billion in foreign direct investment (FDI).
“5% inflation is possible next year. Look at what happened in Argentina. Economists don’t prophesy but make conditional statements. If the president can complement the efforts on tax and finance reforms with an investment act to attract $50bn FDI within the next year, exchange rates will stabilize, and inflation will drop to single digits,” Teriba explained.
“The interest rates offered to Nigeria by international creditors are among the highest globally, primarily due to the country’s poor credit rating. This makes borrowing inefficient and unsustainable as a long-term strategy,” he said.
