Tinubu Raises 2025 Budget to N54.2 Trillion; Experts Fault Move, Warn of Rising Debt

• President Bola Tinubu has asked the Senate and the House of Representatives to allow the increment of the 2025 budget from N49.7 trillion to N54.2 trillion
• Renowned economist, Ayo Teriba, questioned the need to increase spending, suggesting that the government should instead use any additional revenue to reduce the deficit
• Financial expert, David Oparinde, says the increase may lead to inflation, increased borrowing, and inefficient allocation of resources if not executed with discipline.

President Bola Tinubu has asked the National Assembly to allow an increment in the 2025 budget from N49.7 trillion to N54.2 trillion.

Godswill Akpabio, the president of the Senate, read Tinubu's request letter during the plenary on Wednesday, February 5.

According to the letter, the president attributed the reason for the development to additional revenue generated by some key government agencies.

President Tinubu disclosed that the amount and the agencies are N1.4trillion from the Federal Inland Revenue Service (FIRS), N1.2 trillion from the Nigeria Customs Service, and N1.8trillion from other government-owned agencies

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Akpabio then referred the letter to the Senate Committee on Appropriation, urging them to take a brief action on the president's request.

The Senate president then assured that the 2025 budget would be reviewed and passed before the end of February.

Senate resumed plenary

At the first plenary of the Senate in 2025, Akpabio said that the Upper Chamber must complete the electoral reform in 2025. The senator made the remark while addressing the lawmakers on Wednesday, January 15.

Akpabio reminded the lawmakers that one of the Red Chamber's priorities is the speedy passage of the 2025 appropriation bill. He urged the lawmakers to make a renewed commitment to the legislative affairs.

The Senate President urged his colleagues to make the aspirations of those with fewer privileges a reality through the laws they pass. He maintained that the legislature can make Nigeria the pride of Africa and a beacon of hope to the world.

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Akpabio speaks on visiting Tinubu

He recalled that during the break, the leadership of the Senate and the House of Representatives visited President Bola Tinubu at his residence in Lagos on behalf of the lawmakers. He said the president also sent his wishes and greetings to the lawmakers.

According to him, Nigeria was currently going through trials that would shock the world in a short period of time. He then expressed the optimism that the challenges before Nigeria were with seeds of opportunities and that the country would triumph.

He maintained that passing the 2025 budget was of the utmost importance to the lawmakers. To him, the budget has the potential to restore Nigeria's lost economic glory. He described the budget as a major instrument in igniting prosperity, securing peace, and laying the foundation for a strong and resilient Nigeria.

'Must you spend all?' - Expert tackles FG's planned budget increase

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Chief Executive Officer of Economic Associates, Ayo Teriba, speaking exclusively with Legit.ng, expressed skepticism about Nigeria's proposed N54.2 trillion budget for 2025, citing concerns about the country's rising deficit.

Teriba also acknowledged that interactions between the executive, the national assembly, and the minister of budget and economic planning, Atiku Bagudu, established that more revenue could be generated by government-owned agencies

However, the economist asked:

"Must you spend everything that every agency is capable of generating? Why don't you use it to reduce the deficit?"

He also highlighted the uncertainty surrounding the budget, noting that there is no evidence to support the government's revenue projections.

Teriba said:

"We are not sure about what was spent in 2024. We are not sure about how realistic it is that the N54.2 trillion will be spent and can be funded in 2025. There is no evidence. There are genuine grounds to be skeptical about the budget proposal that is on the table.”

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2025 budget increase will cause economic instability - Expert

Financial expert, David Oparinde, has sounded the alarm on the potential dangers of budgetary expansion, citing the risk of economic instability if not managed properly.

Oparinde, managing partner, David Oparinde and Co.Chartered Accountants, in a chat with Legit.ng, said while budgetary expansion can stimulate economic growth and create jobs, it can also lead to inflation, increased borrowing, and inefficient allocation of resources if not executed with discipline.

He warned:

"Instead, the negative effects of excess spending will occur, including inflation. That's exactly what we're having today - the Nigerian Labor Congress, instead of looking for ways to bring down prices, is asking for more salary. They've been given more salary, but they cannot even buy anything in the market. The government's borrowing will lead to higher interest rates, making it harder to secure loans in the future."

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Oparinde also emphasized the importance of allocating funds to the right sectors, such as education, healthcare, and infrastructure development.

As he said:

"If those in charge are not disciplined, and the money is spent on non-essential items, instead of going into the real sector - healthcare, and education, then increased aggregate demand, job creation, improved public services, and reduced poverty cannot be achieved.”

Economic expert warns of inflationary pressures

In a chat with Legit.ng, Charles Abuede, an economic analyst described President Tinubu's request to increase the 2025 budget to N54.2 trillion as very ambitious and risky.

The analyst said:

“Over the years, Nigeria’s revenue generation has remained weak, and the Federal Government’s N36.35 trillion revenue target for 2025 faces significant risks, particularly due to subdued oil earnings and constrained non-oil revenue growth. As a result, the actual fiscal deficit could surpass N15 trillion, exceeding the N13.39 trillion initially budgeted, further deepening the country’s debt burden with increased borrowings.”

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Abuede also expressed concerns about inflationary pressures, given that much of the increased spending is allocated to recurrent expenditure.

He warned:

"A rise in government outlays without a corresponding boost in productivity could fuel price increases, especially if deficit financing remains the primary funding mechanism.”

However, Abuede acknowledged that improvements in crude oil production were encouraging.

As he put it:

“On a positive note, crude oil production improvements, averaging 1.43mbpd in Q4 2024, are encouraging. However, this remains significantly below the 2.06mbpd baseline projected in the 2025 budget, which is necessary to strengthen fiscal buffers and stabilise government finances. Without a sustained increase in oil output and meaningful revenue reforms, fiscal pressures are likely to persist.”

Knocks as lawmakers sing Tinubu's mandate songs

Legit.ng earlier reported that President Tinubu was assured of the National Assembly's support for his administration on Wednesday, December 13, 2024.

This came as senators and House of Representatives members sang the Nigerian leader's mandate song during his 2025 budget presentation to the legislature.

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Some Nigerians have condemned the national assembly members' singing of Tinubu's mandate songs, and some have also criticised the budget's content.

Source: Legit.ng