Abuja, Nigeria — The World Bank has cautioned that Nigeria’s 2025 federal budget is overly ambitious, raising red flags over potential revenue shortfalls that could force the Federal Government to turn to the Central Bank of Nigeria (CBN)’s Ways and Means facility for financing.
The warning was issued on Monday at the launch of the World Bank’s latest Nigeria Development Update report titled “Building Momentum for Inclusive Growth” in Abuja.
N54.99 Trillion Budget Under Scrutiny.
President Bola Tinubu signed into law a record-breaking N54.99 trillion 2025 Appropriation Act, an increase from the initially proposed N49.7 trillion. The budget allocates:
- N13.64tn for recurrent expenditure
- N23.96tn for capital projects
- N14.32tn for debt servicing
- N3.65tn for statutory transfers
- With a projected deficit of N13.08tn, to be funded via domestic and external borrowing.
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Budget assumptions include:
- Oil price benchmark at $75 per barrel
- Oil production of 2.06 million barrels/day
- Exchange rate of N1,400/$
- Inflation target of 15%
World Bank Flags Unrealistic Assumptions.
World Bank’s Lead Economist for Nigeria, Mr. Alex Sienaert, expressed skepticism over the feasibility of these projections.
“Even considering strong revenue growth in 2024, it will be hard to meet the ambitious revenue targets,” he said.
He highlighted key concerns:
- Current oil production hovers around 1.6 million barrels/day, not the projected 2.06 million.
- Uncertainty about revenue from petrol subsidy removal and the planned windfall tax on forex gains.
- A risk of reverting to Ways and Means financing if revenue targets are missed.
“Authorities have pledged not to return to deficit monetisation via the CBN, but doing so would be highly disruptive,” Sienaert warned.
Call to End Electricity Subsidy and Improve Fiscal Reforms.
The World Bank called for further fiscal discipline, urging the government to:
- Remove electricity subsidies, labeling them “wasteful and regressive.”
- Increase non-oil revenue collection.
- Improve transparency in oil revenues.
- Cut wasteful spending, like excessive vehicle procurement and foreign training.
- Invest more in health and education, where Nigeria ranks among the lowest globally.
“In 2022, only 1.2% of GDP was spent on education and 1.8% on health,” Sienaert noted.
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Nigerian Government Defends Budget Projections.
In response, Minister of Budget and Economic Planning, Senator Abubakar Bagudu, disagreed with the World Bank’s stance, calling the budget “modest and achievable.”
“We’ve produced more than 2.3 million barrels per day before. The technical and fiscal capacity is there,” he said. “Budgets should be aspirational.”
Bagudu emphasized:
- Revenue-to-GDP and expenditure-to-GDP ratios are improving.
- The Tinubu administration is mapping economic opportunities in all 8,809 political wards.
- Cash transfers alone won’t solve poverty, but grassroots economic development can.
Minister Edun Urges Transparency and Investment.
Also speaking, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for enhanced transparency, particularly in oil revenues.
“Transparency of fiscal data, especially in the oil sector, is key,” Edun said.
He highlighted that investment is central to achieving productivity, economic growth, and job creation — crucial to lifting millions out of poverty.
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The Road Ahead
The World Bank reaffirmed that Nigeria’s reforms — including petrol subsidy removal and a market-reflective exchange rate — have already yielded gains. But more is needed to:
- Sustain macroeconomic stability
- Restore confidence in the naira
Achieve Nigeria’s goal of becoming a $1 trillion economy by 2030
