Nigeria Bets on Oil Revenue to Fund $32B 2025 Budget
TLDR
- Nigerian President Bola Tinubu presented a record 49.7 trillion naira ($32 billion) budget for 2025
- The govt also projects revenue of 34.8 trillion naira and a deficit of 13.1 trillion naira, or 3.9% of GDP
- The government plans to fund the shortfall through domestic and international borrowing
Nigerian President Bola Tinubu presented a record 49.7 trillion naira ($32 billion) budget for 2025, projecting revenue of 34.8 trillion naira and a deficit of 13.1 trillion naira, or 3.9% of GDP. The government plans to fund the shortfall through domestic and international borrowing.
The budget assumes oil prices at $75 per barrel and daily production of 2.06 million barrels—targets analysts view as overly optimistic given Nigeria's recent struggles to meet OPEC quotas. Last month, crude output was 1.5 million barrels per day, impacted by theft and operational issues.
Tinubu expects GDP growth of 4.6% and inflation to fall to 15%, but these projections exceed those of the IMF and African Development Bank. Debt servicing costs are set at 15.8 trillion naira.
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Key Takeaways
Tinubu’s reforms, including naira devaluation and subsidy removal, have boosted foreign investment in oil and gas, with $5 billion secured and a target of $10 billion. However, reliance on oil revenue exposes the budget to global market volatility. Experts caution that ambitious growth and oil-production targets, coupled with exchange-rate instability, could lead to higher deficits and inflation. With elections in 2027, this may be the administration’s final opportunity to stabilize finances and reduce poverty through human-capital investments in education and healthcare. Achieving fiscal sustainability will require careful management of resources, diversification of revenue streams, and addressing structural challenges in oil production and governance.
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