The Federal Government of Nigeria has increased the 2025 Appropriation Bill from N49.7tn to N54.2tn, citing additional revenue generated by key government agencies. This decision has sparked mixed reactions from economic players and policymakers.
Budget Adjustments and Revenue Sources
On Wednesday, President Bola Tinubu’s letters detailing the budget adjustments were read on the Senate floor. These letters, addressed to both the Senate and the House of Representatives, outlined the revenue sources driving the budget increase. Initially, Tinubu had presented a N49.7tn budget proposal in November, themed ‘Budget of Restoration: Securing Peace, Rebuilding Prosperity.’
The Federal Government projects total revenue of N36.35tn for 2025, largely supported by expanded tax collections, customs duties, and independent revenue from government-owned enterprises. Additionally, oil revenue projections are based on a crude oil benchmark of $75 per barrel, a production target of 2.06 million barrels per day, and an exchange rate of N1,500 per USD.
The increased budget stems from revenue improvements, including N1.4tn from the Federal Inland Revenue Service (FIRS), N1.2tn from the Nigeria Customs Service, and N1.8tn from other government agencies. This adjustment has been forwarded to the Senate Committee on Appropriations for urgent consideration. Senate President Godswill Akpabio has assured lawmakers that the budget will be finalized and passed before the end of February.
Rationale Behind the Budget Increase
Minister of Budget and Economic Planning, Atiku Bagudu, explained that government-owned enterprises, including the Nigeria Customs Service, have demonstrated the capacity to generate additional revenue. He emphasized that over N4.5tn in new revenue was identified, prompting the need to adjust the budget.
Bagudu stated:
“The Senate Committee on Appropriation, Senate Committee on National Planning, and Senate Committee on Finance established that we can generate more revenue by tasking all institutions to do more, and the FIRS confirmed its ability to exceed previous estimates.”
He further revealed that the additional funds would be allocated to the Bank of Agriculture, Bank of Industry, the solid minerals sector, and infrastructure projects to support the country’s diversification agenda.
Mixed Reactions from Economic Experts
While some industry experts support the budget increase, others have raised concerns about its economic implications.
Concerns Over Economic Stability
Economist and sustainability expert Marcel Okeke criticized the government for its last-minute budget adjustments, arguing that such moves undermine Nigeria’s economic credibility.
“If the government wanted a supplementary budget, that would have been different. However, making adjustments within one to two months of submission is problematic. The figures released in December have already influenced global economic assessments of Nigeria,” he said.
Chief Economist and Partner at SPM Professionals, Paul Alaje, also warned that the budget increase could fuel inflation, making the government’s 15% inflation target unrealistic.
“With this amount injected into the economy, it’s unlikely that the FG’s expectation of 15% inflation will materialize,” he stated.
Support for Increased Spending
Conversely, Tunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, welcomed the increase, emphasizing the need for an ambitious budget to drive infrastructural development.
“On a per capita basis, our budget is significantly lower than those of countries with similar demographics. If we want to lift people out of poverty, the government must spend more to raise the standard of living,” he argued.
While supporting the increase, Amolegbe cautioned that Nigeria must closely monitor debt-to-revenue and debt-to-GDP ratios to avoid financial overextension.
A leading economist, who requested anonymity, disagreed with the budget expansion, stating that it aggravates Nigeria’s fiscal deficit, which is nearing N16tn.
“Instead of increasing spending, the government should focus on reducing the deficit. Over the years, we have failed to meet our revenue targets, so how can we be sure we will generate the projected amount this time?” he questioned.
Legislative Support and Next Steps
Despite concerns, the House of Representatives has endorsed Tinubu’s proposal, affirming that the budget expansion is driven by additional revenue from key agencies. House Deputy Speaker Benjamin Kalu presided over discussions on the proposal, which was referred to the Committees on Finance and Appropriations for expedited review.
House spokesman Akin Rotimi confirmed that lawmakers would thoroughly scrutinize the proposal before passage. Meanwhile, House Deputy Spokesman Philip Agbese highlighted the budget’s emphasis on agriculture, national security, and infrastructure development.
“We are particularly encouraged by the allocation to strategic sectors like agriculture, which will strengthen food security. Additionally, increased funding for national security, including barracks construction for troops, reflects the administration’s commitment to national stability.”
Conclusion
With the 2025 budget expected to be passed by the end of February, stakeholders continue to debate its economic impact. While some view it as a necessary step for infrastructural growth, others warn of inflationary pressures and fiscal instability. As the legislative process unfolds, all eyes remain on the National Assembly’s final decision.
