A simmering debate over the realism of Nigeria’s N54.99 trillion 2025 budget has sparked a clash between the Federal Government and the World Bank, with both parties offering starkly different views on the country’s fiscal direction and economic capacity.
The World Bank, in its latest Nigeria Development Update report presented in Abuja on Monday, described the 2025 budget as “overly ambitious,” warning that the country may be forced to rely on the Central Bank of Nigeria’s controversial Ways and Means overdraft facility to plug potential revenue gaps—a move it says could undermine Nigeria’s fragile economic recovery.
President Bola Tinubu had earlier signed the 2025 Appropriation Act into law, approving the largest budget in Nigeria’s history.
The spending plan includes N13.64 trillion for recurrent expenditure, N23.96 trillion for capital projects, and N14.32 trillion for debt servicing, while projecting a deficit of N13.08 trillion to be financed through domestic and external borrowing.
Presenting the report titled “Building Momentum for Inclusive Growth”, the World Bank’s Lead Economist for Nigeria, Alex Sienaert, said the budget is built on assumptions that are likely too optimistic—especially crude oil production pegged at 2.06 million barrels per day and a $75 per barrel price benchmark.
He noted that current production is closer to 1.6 million barrels per day.
“It’s a very ambitious budget,” Sienaert said. “Even with positive revenue gains in 2024, it looks like it’s going to be pretty hard to meet some of the ambitious revenue targets.”
He warned that if those targets are missed, the government could face mounting financing needs, potentially reviving the use of CBN overdrafts—a practice authorities had previously promised to avoid due to its inflationary consequences and impact on the naira’s stability.
“Were that to happen, it would be extremely disruptive to rebuilding confidence in fiscal sustainability,” he cautioned.
Sienaert also raised concerns over revenue remittance from the Nigerian National Petroleum Company Limited (NNPCL), revealing that only about half of the expected proceeds from fuel subsidy removal had reached the Federation Account as of January 2025.
He urged the government to eliminate the electricity subsidy, which he described as “wasteful and regressive,” and called for deeper reforms in oil revenue transparency, governance cost reduction, and non-oil revenue generation.
But the Federal Government has strongly rejected the World Bank’s assessment.
Speaking at the same event, the Minister of Budget and Economic Planning, Senator Abubakar Bagudu, insisted that the budget was not only achievable but also necessary for economic transformation.
“Is the projection of the 2025 budget ambitious? No, they are not. They are all modest,” Bagudu said. “We have produced more than 2.3 million barrels a day in the past. The technical and fiscal capacity is there.”
According to him, budgets must be aspirational and serve as tools to harness national potential rather than merely reflect existing challenges.
“A budget should not be a reflection of our indulgences. It should be a reflection of our potential,” he added.
Bagudu also cited recent improvements in fiscal performance, such as rising revenue-to-GDP and expenditure-to-GDP ratios, and highlighted an upcoming national initiative to map economic opportunities in all 8,809 political wards in Nigeria.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, echoed similar sentiments.
He acknowledged that while reforms had begun to stabilise the economy, more transparency—especially in oil revenue reporting—was needed.
“The key is investment. It is investment that increases productivity, grows the economy, and creates high-quality jobs,” Edun said.
He noted that government agencies were being coordinated to ensure consistent and transparent data reporting.
Also speaking, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, reiterated the apex bank’s commitment to orthodox monetary policy and price stability. He said exchange rate volatility had significantly reduced, and that inflation was expected to moderate as reforms deepened.
Other stakeholders echoed confidence in the reform agenda. Minister of Communications, Innovation and Digital Economy, Bosun Tijani, highlighted the surge in foreign investment into the digital sector—from $22 million in Q1 2023 to nearly $200 million in Q1 2024—citing growing investor confidence.
However, private sector leaders called for greater policy stability and clearer direction. Managing Director of UAC Foods, Oluyemi Oloyede, said government must back its reform rhetoric with consistent actions.
“You say $1 trillion economy by 2030. I need to know what the government will do—and not do—between now and then,” Oloyede said. “We need to promote progress over perfection, but we must never stop aiming for excellence.”
The World Bank report concluded with a call for a new, “private-led, public-facilitated” growth strategy and renewed emphasis on reducing poverty, increasing investments in education and health, and unlocking the full benefits of reform.
As Nigeria moves forward with its 2025 spending plan, the debate between ambition and realism is likely to intensify—especially if revenue projections fall short and the government is forced to revisit financing strategies many hoped had been buried for good.
