Business
Nigeria’s 2025 budget lowest since 2018 – Experts
The Nigerian Economic Society (NES), has observed that Nigeria’s proposed N47.9 trillion 2025 budget is the lowest the country has had since 2018 in dollar terms.
According to BusinessDay, in a statement signed by Adeola Adenikinju, president of NES on Tuesday, the association said though the budget is at a record high in naira terms, the effect of naira devaluation has shrunk its value when converted to the U.S. dollars.
“In nominal terms, the 2025 budget is the biggest naira value budget in Nigeria’s history. However, in terms of real purchasing power at constant U.S. dollars, this budget is the lowest since 2018,” the statement read.
Using the prevailing exchange rate of $1/N1, 679, the proposed budget of N47.9 trillion translates to $27.96 billion, a 17.76 drop from the 2024 budget of $34 billion at constant dollar prices.
However, when the N1,400/$ used to peg the budget is computed, the value of the expenditure amounts to $34.14 billion which is still lower than the 2022 budget of N16.39 trillion at $39.8 billion and 2021’s N13.6 trillion at $35.66 billion.
Adenikinju noted that the benchmark exchange rate of N1, 400/USD though ambitious, is considered not fully grounded in the potential fiscal and monetary expectations in 2025 and deviates from major expert projections.
He explained that using this benchmark may require alternative supply sources of high and more stable forex earnings for building high external reserve stocks.
“The risks and uncertainties surrounding dependence on oil exports revenue do not justify a sudden rapid appreciation in the naira exchange rate in 2025,” the NES president said.
“Average naira exchange rate projections by leading global financial institutions set the naira exchange rate at a base case scenario of N1,750/$1. From our own analysis, we project a base case exchange rate of N1,850/$1 in 2025,” he added.
Adenikinju recommended revising the oil price benchmark in the proposed budget from the current $75 per barrel to $70 per barrel in order to give room for adjustment should there be any major oil price shocks.
The NES explained that a fall in global oil prices is plausible considering Donald Trump’s rhetoric about intensified oil drilling efforts in the USA.
The economists also noted that the budget’s oil production benchmark set at 2.06 million barrels per day is feasible if the government intensifies its war on oil theft and pipeline vandalism.
“Oil price of $75/barrel appears to be conservative at current price trends, but it fails to account for a potential fall in oil price that many accompany the dousing of geopolitical tension under President Trump’s administration, as well as impact of ongoing rapid energy transition initiatives,” the statement read.
As of November 18, Brent Crude futures were trading around the $73 per barrel region, with the Nigerian crude oil variety Bonny Light trading around the $80 mark.