The N54.99tn budget for 2025 raises inflation concerns, say economists.

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Economic experts are warning that the recently passed 2025 Appropriation Bill of N54.99tn may lead to higher inflation in Nigeria. The National Assembly approved the budget, which allocates N14.32tn for debt servicing and N13.64tn for recurrent expenditure.

Paul Alaje, chief economist at SPM Professionals, expressed concerns about the budget’s potential impact on inflation. “The revenue authorities will have to go the extra mile. In terms of expenditure, it is quite expansionary, and then we should brace up for inflation in the coming period if we truly spend all of this money,” Alaje said.

Alaje also noted that the government’s plan to reduce inflation to 15% may not be achievable given the increased spending. “The government is looking to reduce inflation to 15%, but the same government is thinking of spending more. So, it’s not exactly at par with what the government is looking at in terms of inflation.”

Furthermore, Alaje highlighted the risks associated with credit financing and revenue generation. “How are we going to get the funds to finance this project? One is a revenue gap. We know that the President has tried to push down debt service to revenue to about 67% from 98%, but with this kind of spending, it can only go higher.”

Dr. Joseph Ogebe, head of research at the Nigerian Economic Summit Group, emphasised the need for private sector involvement in implementing the budget. “The 2025 approved budget of N54.9tn is the highest ever recorded in nominal terms. The increase in capital allocation is a welcome development, signalling a stronger commitment to infrastructure development.

Ogebe also stressed the importance of addressing Nigeria’s infrastructure gap and enhancing fiscal efficiency. “However, successful implementation of the capital budget—alongside private sector support—is essential to addressing Nigeria’s significant infrastructure gap. The high recurrent expenditure remains a concern, and efforts should focus on enhancing overall fiscal efficiency.”

“In addition, increasing budgetary spending on social interventions is crucial to cushioning the effects of ongoing reform. Finally, the budget must emphasise the development of critical infrastructure to support businesses, unlock binding constraints to growth, and drive national development,” Ogebe added.

Alaje also expressed concerns about the rebasing of the Consumer Price Index by the National Bureau of Statistics, saying it may not have a significant impact on the budget’s spending. “From what is in the public domain, NBS wants to reduce the influence of food inflation, or overall inflation. NBS feels that food inflation does not have weight, even though I disagree to an extent.”

Alaje explained that the rebasing may not effectively address inflation. “So when you reduce something that has 50% or so to maybe 25% or 30% or 20%, as the case may be, and you now use other components to have the influence on this, it will appear as though, in number terms, inflation has reduced, but commodity prices in the market remain the same.”

“The rate of growth in inflation has not been targeted. If you must control inflation, it’s not going to come by merely adjusting numbers,” Alaje concluded.

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