The proposed Nigerian budget for 2025 at N47.9 trillion is the new high in nominal terms, while in dollar terms, it marks the lowest point since 2018, according to the Nigerian Economic Society (NES). NES President Adeola Adenikinju, in a statement released on Tuesday, said the budget’s largely naira value now has a much-diminished impact due to the deprecation of the naira when translated into U.S. dollars.
Using the current exchange rate of N1,679 to $1, the 2025 budget would equal approximately $27.96 billion, representing a 17.76% decrease compared to the $34 billion allocated in 2024, on an adjusted constant dollar basis. Using a more positive exchange rate of N1,400 to $1, the value of the 2025 budget would approximate $34.14 billion, still not at the same level as previous years. For comparison, the 2022 budget has been valued at $39.8 billion, and that of 2021 is at $35.66 billion, although having lower nominal figures.
Adenikinju welcomed the projected exchange rate assumptions-the N1,400/$, though ambitious-but expressed doubt about its appropriateness under fiscal and monetary realities that may characterize 2025. He further cautioned that heavy reliance on oil exports, which face ongoing volatility, could undermine Nigeria’s ability to stabilize the naira at the projected exchange rate. NES projects a realistic exchange rate to be around N1,850 per dollar.
In view of this, NES suggested the proposal of reducing the oil benchmark price in the 2025 budget from $75 per barrel to $70 per barrel considering potential drops in global prices. According to analysts, the threat of falling oil prices has emerged following predictions that oil production across the world will be soaring, especially from the United States.
Furthermore, the budget projects a deficit of N13.8 trillion, surpassing 3% allowance in the Nigerian Fiscal Responsibility Act at 3.87% of GDP.
NES has urged the National Assembly to review Nigeria’s budgetary framework, critically reassessing fiscal targets in order to more fully address what are the country’s critical economic and social issues.
