Nigeria’s Budget Uncertainty Raises Alarm Among Economists
Economists have sounded the alarm over Nigeria’s return to fiscal uncertainty as the nation enters the new year without an approved budget—a departure from the January-December budget cycle restored under the Buhari administration.
President Bola Tinubu submitted a proposed ₦49.7 trillion budget for 2025 to the National Assembly on December 18, 2024, weeks later than mandated by the Fiscal Responsibility Act 2007, which requires budget submission at least three months before the next financial year. With the budget currently at the committee stage, its passage is unlikely until early February 2025, according to lawmakers’ timelines.
Investor Confidence at Risk
Paul Alaje, Chief Economist at SPM Professionals, warned that the delay creates uncertainty for investors. “The budget is still at the committee stage and may not be passed until February. This breaks the expected January-December cycle and has significant implications for investment and economic stability,” Alaje said.
He suggested that the delay may be tied to pending tax reform bills introduced by the Tinubu administration in October 2024. The reforms, encapsulated in four bills, aim to overhaul Nigeria’s tax system by consolidating laws, streamlining administration, and boosting revenue. “It appears the budget’s approval hinges on these tax bills. The process feels orchestrated,” Alaje added.
A Reversal of Progress
Marcel Okeke, former Chief Economist at Zenith Bank Plc, lamented the reversal of the January-December budget cycle achieved under former President Muhammadu Buhari. “During Buhari’s tenure, budgets were presented and approved on time. This delay tells local and foreign stakeholders about the uncertainty and rudderlessness in the economy,” Okeke remarked.
He criticised the late submission of the 2025 budget, noting that its passage cannot occur until the National Assembly resumes from recess. “The earliest we can expect progress is January 31, meaning the delay could stretch further. This creates confusion and opens the door to emergency spending without proper oversight,” Okeke warned.
Details of the 2025 Budget Proposal
Tinubu’s ₦49.7 trillion “Budget of Restoration: Securing Peace, Rebuilding Prosperity” outlines ambitious revenue and expenditure plans for 2025. The Federal Government projects ₦36.35 trillion in revenue, driven by expanded non-oil revenue streams, including taxes, customs duties, and independent revenues from state-owned enterprises. Oil revenues are based on a $75 per barrel benchmark, a production target of 2.06 million barrels per day, and an exchange rate of ₦1,500 per USD.
The budget earmarks significant allocations for critical sectors while targeting a fiscal deficit of ₦13.39 trillion (3.96% of GDP). The deficit is to be financed through domestic and external borrowings and public-private partnerships.
Economic Implications
Despite its lofty ambitions, the delay in passing the budget undermines confidence in the government’s economic management. Both economists agree that timely approval is crucial to stabilising the economy, attracting investment, and ensuring fiscal discipline.
As Nigeria awaits the outcome of the legislative process, the delay poses risks to both local businesses and international investors, further highlighting the urgent need for fiscal consistency.
