The Nigerian Senate has passed the 2025 Appropriation Bill, approving a record-high budget of N54.99 trillion on Thursday.
This budget, which includes allocations for statutory transfers, recurrent and capital expenditures, as well as debt servicing, marks a significant increase from the initial proposal presented by President Bola Tinubu.
Key Budgetary Allocations
The breakdown of the 2025 budget as approved by the Senate is as follows:
- Total Expenditure: N54.99 trillion
- Statutory Transfers: N3.65 trillion
- Recurrent (Non-Debt) Expenditure: N13.64 trillion
- Capital Expenditure: N23.96 trillion
- Debt Servicing: N14.32 trillion
- Fiscal Deficit: N13.08 trillion
- Deficit-to-GDP Ratio: 1.52%
The budget aims to stimulate economic growth, improve infrastructure, and address fiscal challenges, despite concerns about Nigeria’s rising debt profile.
Increase in Budget Size
Initially, President Tinubu proposed a N49.7 trillion budget for 2025. However, following additional revenue projections from key government agencies, the proposed figure was revised upward to N54.2 trillion on February 5, 2024. The final approved budget stands at N54.99 trillion after deliberations in the National Assembly.
According to Senate President Godswill Akpabio, the increase was justified by new revenue inflows from key agencies, which are expected to strengthen the fiscal framework for 2025.
Sources of Additional Revenue
In a letter addressed to both the Senate and the House of Representatives, President Tinubu outlined the sources of the additional revenue:
- Federal Inland Revenue Service (FIRS): N1.4 trillion
- Nigeria Customs Service (NCS): N1.2 trillion
- Other Government Agencies: N1.8 trillion
These additional funds, he noted, would help bridge fiscal gaps and fund critical infrastructure projects.
Legislative Approval Process
The House of Representatives had earlier approved the N54.99 trillion budget, paving the way for Senate confirmation. With the Senate’s approval, the bill now awaits presidential assent to become law.
Economic Implications
Analysts have raised concerns about the growing fiscal deficit, estimated at N13.08 trillion, and the rising debt servicing costs. At N14.32 trillion, debt servicing accounts for a significant portion of the budget, which could impact funds available for infrastructure and social programs.
However, the government remains optimistic that increased revenue collection and economic reforms will mitigate these concerns. The 2025 budget prioritizes capital investments, with N23.96 trillion earmarked for capital projects, the highest in recent years.
More insights
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.
Tinubu stated, “The 2025 budget projects that inflation will decline significantly from the current 34.6% to 15%,”.
Also, the president promised to stabilise the exchange rate to N N1,500/$1. Tinubu noted “Concurrently, the exchange rate will improve from approximately N1,700 per dollar to N1,500. These projections are critical for stabilizing the economy and ensuring sustainable growth.”
Some analysts have expressed concerns over the fiscal regime of President Bola Tinubu’s administration, describing the increase in debt servicing from N8 trillion in 2024 to N16 trillion in 2025 as a ‘red flag’.
“The fiscal regime [under President Bola Tinubu] has a red flag. And the red flag is the fact that debt service has increased from N8 trillion last year to N16 trillion. So, that is a red flag because the debt service at N16 trillion is more than Defence, Security, Infrastructure, Health, and Education combined which is N14 trillion,” Tilewa Adebayo, the CEO of CFG Advisory said.
