This article analyzes the Nigerian 2025 budget and its potential impact on the country's economic growth. It questions whether the current trajectory can lead to a trillion-dollar economy by 2030.
Whatever will be, will be, translated in Latin as Que Sera, Sera, was the response I got from a friend when I asked him over lunch if he possibly thinks that with the current economic growth rate, Nigeria can attain the status of a trillion dollar economy by 2030. A colloquialism I know sounds very familiar and has assumed a very popular form of sloganeering, depicting that the future is in the air and fate determines the outcome of a course of events.
While this phrase may often come in handy and be correct in some instances and could be a helpful attitude to ease anxiety, the same cannot be adopted for a nation’s economy as no economy is guaranteed to grow unless certain factors are dispassionately implemented. Certain factors determine the kind of economy countries have. One of such factors is the expenditures profile of the government. Nothing is left to chance in the economic transformative processes of a nation. Data and stats play critical roles and financial and economic experts go in the direction they take them, just in the same way DNA evidence does in forensic crime investigations – I understand crime investigators would typically go anywhere DNA evidence leads them even if other evidence may be pointing in a different direction. Achieving profound economic growth requires conscientious and intentional planning. Talking about planning and the economic projections for the next five years, one would wonder, going by the stats analyzed in the 2025 Appropriation Bill dubbed “The Restoration Budget: Securing Peace, Rebuilding Prosperity” and presented to the NASS by President Tinubu last month, if the kind of total expenditure earmarked in this bill would guarantee the GDP threshold of $1 trillion promised by this administration by 2030. Are we truly on track to achieve this phenomenal feat in five years? With an average growth rate of 3.2 percent in 2024, the economic growth is indisputably very slow and the government needs to expand the economy by increasing spending exponentially. There is a direct correlation between the annual total spending of a government and economic growth. Many had hoped that there would be a dramatic shift to substantially increase the government’s 2025 total expenditure to spur productivity and aggregate demand, create job opportunities, make massive investments in infrastructure in key sectors and improve the quality of life of Nigerians.The size of the 2025 budget relative to the size of our population has come under attack. It highlights the disappointment of many wishing that the total spending would be considerably higher but definitely not to fund corruption. A surfeit of experts have described it as too meagre to service a population as large as ours – estimated by IMF to be 233 million. Nonetheless, the hallmark of the 2025 Appropriation Bill is the conspicuous absence of any funds allocated to fuel subsidy. This has loomed large over the economy of this nation. The response to its non-inclusion has been meteoric and sensational – rightly so. The removal of the fuel subsidy is a long time coming and it will assuredly have enduring economic effects well into the future for the country. However, it is as if the makeup of the 2025 national budget proposal has taken a surprising new twist with debt servicing replacing the fuel subsidy. It can be safely assumed that the $6-10 billion characteristically allocated to this expense line over the years has been repackaged as debt servicing – 15.8 trillion naira ($10 billion). While the 2025 Appropriation Bill of 49.7 trillion naira is 42 percent higher than the 2024 Appropriation Act of 35 trillion naira, it is way smaller in absolute terms due to the massive devaluation of the naira. Unfortunately, Nigeria would continue to reel from naira devaluation because of her debt burden notably from our foreign exposures. A deficit financing of 13 trillion naira occasioned by the ridiculously low revenue profile of the nation is extremely worrisome. Implications are that the debt servicing for 2026 will likely increase. The reversal would however continue to be elusive if the nation’s revenue profile isn’t stepped up to appreciably stem deficit spending and stop the reliance on loans.To fix this, rebuild fiscal space and create macroeconomic stability, there may be an urgent need to restructure the country’s debt portfolio. There are reports that Nigeria is being ripped off with high fees as the interest rates by international creditors on loans availed to the country are one of the highest globally. An urgent need to renegotiate the terms of most of our exposures is extremely desirable. Furthermore, there should be a lot of debates and discussions around how to boost the state of our government and eke out an economic win that would serve the overall interests of the peopl
BUDGET ECONOMY GROWTH DEBT NIGERIA
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