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…Experts fear budget may not deliver ‘tangible gains’
…Tinubu, Shettima to spend N8.74bn on local, international trips
Nigeria plans to spend N15.81 trillion or 45 percent of its entire revenue to service debt obligations in the next fiscal year, which is higher than N14.97 trillion earmarked for security, infrastructure, education and health combined – four top priorities of the federal government in 2025.
Analysts worry that debt servicing, also known as debt burden, is taking a large chunk of Nigeria’s revenue, leaving critical sectors under-funded.
They argue that the government must lower its debt servicing costs to address fundamental issues dragging the nation, especially insecurity, infrastructure gaps as well as poor education and health outcomes.
Read also: Of N2.23 trn ransom, ubiquitous ‘repentant’ bandits and increased security budget
Inside 2025 Budget
Dubbed ‘Budget of Restoration: Securing Peace, Rebuilding Prosperity,’ President Bola Tinubu plans to spend N4.91 trillion on security, N4.06 trillion on infrastructure, N3.52 trillion on education and N2.48 trillion on health, putting the total allocations at N14.97 trillion.
President Tinubu, while addressing the lawmakers at a joint session on Wednesday, said there was an urgent need to reduce repayments, but he noted that the 2025 appropriation bill had a deficit of N13 trillion, representing about 26.1 percent of the total budget.
Tinubu is projecting that inflation, which has climbed to a 28-year high, will decline from its current 34.6 percent to 15 percent while the exchange rate will improve from approximately N1,700/$1 to N1,500/$1.
The crude oil production will hit 2.06m barrels per day, according to the president.
The latest exchange rate expectation is however much lower than the 2024 budget proposal, in which Tinubu pegged the currency at N750/$1, an assumption that proved to be completely off the mark.
However, the Nigerian leader said the latest revenue projections are based on a reduced importation of petroleum products, increased foreign portfolio investments, exports, and bumper harvests following improved security.
Experts have however raised concerns that the projected economic growth may be hindered as debt servicing costs account for some 45 percent of the entire targeted N34.82 trillion revenue next year.
Samuel Sule, CEO of Lagos-based Renaissance Capital Africa, said the budget highlights “the reality regarding Nigeria’s debt servicing costs and the impact on capital expenditure which propels broader economic growth.”
“There is a strong need for higher revenues and less reliance on deficit financing to ensure the Federal Government is on a more sustainable economic path,” he said.
The United Nations recently reported that 40 percent of African countries allocate more funds to debt servicing than to health, highlighting how debt obligations are undermining the continent’s development goals.
“The debt servicing costs for 2025 is about two times that of this year’s,” said a monetary economist, who wished to remain anonymous. “When you use almost half of your revenue for loan repayment, how do you intend to deliver tangible gains?”
Read also: Security, human capital, infrastructure top Tinubu’s 2025 budget priorities
Nigeria’s debt-to-service-revenue ratio quickened to 162 percent in the first half (H1) of 2024, up from the 128 percent reported in the same period last year, according to the Debt Management Office (DMO).
This is just as the nation’s debt burden stood at N134.3 trillion in the second quarter of the year, buoyed by the depreciation of the naira and fresh borrowings from the domestic market.
Adeola Adenikinju, president of the Nigerian Economic Society (NES), said the high debt servicing cost is a reflection of how the Nigerian economy has been relying on borrowings to finance its budget in the last couple of years, explaining that borrowings often come with interests.
He said the country has been living beyond its means in the past years, urging the government to “expand revenue and tax” to lower borrowings and persistent deficits.
“There are so many rich people that are not paying their fair share of tax. The government needs to tax them to improve its revenue and capital expenditure.”
The Nigerian government, knowing that it has a shortage of revenue and ballooning debt profile, is reforming its tax to significantly boost revenues, as the West African nation seeks to rein in widening deficit and borrowing costs.
“Tax reforms are a medium-term mode of increasing revenues and should be combined with a focus on higher oil production (a source of non-borrowed USD) and lower recurrent government spending,” Sule, cited earlier, said.
“When you incur debt and you can see what that debt is being spent on, then there is no problem. Everybody borrows,” Adenikinju said.
The economics professor urged the National Assembly to ensure that borrowings are utilised to improve the socio-economic conditions of the country or are used for investments that can guarantee returns for repayment.
Tinubu, Shettima to spend N8.74bn on travels
Meanwhile, President Tinubu and Vice President Kashim Shettima will spend N8.74 billion on both local and international trips in 2025.
According to the 2025 budget document seen by BusinessDay, the Office of the President was allocated N7.015 billion for travel and transport expenses.
This includes N873.9 million for local travels and transport, and N6.141 billion for international travels and transport.
For the Office of the Vice President, N1.73 billion was allocated for travel and transport expenses. This is divided into N417.488 million for local travel and transport, and N1.315 billion for international travel and transport.
Read also: How FG proposed 2025 budget plans to lift agriculture sector
The expenditures are listed under the State House operations for the president and vice-president.
The combined total allocation for the Office of the President and the Office of the Vice President is N11.636 billion.
Both offices also plan to spend N546.215 million on food stuff/catering materials supplies and N71.431 million refreshment and meals in the coming year.
The combined allocation for honorarium and sitting allowances across both offices is N87.6 million.
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