The World Bank has raised concerns about Nigeria’s ₦54.99tn 2025 federal budget, warning that the country may struggle to meet its revenue targets and could revert to the Central Bank’s Ways and Means facility to cover shortfalls.
During the launch of its latest Nigeria Development Update report, ‘Building Momentum for Inclusive Growth’, in Abuja on Monday, May 12, the Bank’s Lead Economist for Nigeria, Mr Alex Sienaert, described the budget as “very ambitious,” despite 2024’s improved revenue outlook.
“It’s a very ambitious budget. Even with the very positive revenue sort of tailwind that we have… even considering that, it looks like it’s going to be pretty hard to meet some of the ambitious revenue targets that are in there,” Sienaert said.
He questioned assumptions like oil production at 2.1 million barrels per day and a benchmark price of $75, noting current production hovers near 1.6 million barrels.
“This is important because if it does turn out that the revenue targets are not met, then that could mean that the financing requirements are more than budgeted,” he warned.
“And if the financing requirements exceed what’s budgeted, then that’s either going to create arrears pressures… or it could renew risks of recourse to things like deficit monetisation under large-scale Ways and Means.”
Sienaert also flagged risks around oil revenue transparency, incomplete subsidy savings, and the slow rollout of a federal cash transfer scheme meant to cushion reform effects.
“The authorities have been very clear that they will by no means be going back to large-scale use of Ways and Means, but were that to happen, it would be just extremely disruptive to the whole rebuilding of confidence in fiscal sustainability and in the naira ultimately,” he said.
He called electricity subsidies “wasteful, regressive” and urged the government to address them, while also advocating for spending cuts on governance and better use of oil revenues.
On inflation, Sienaert acknowledged the gains from recent monetary policy reforms but said prices remain high.
“We do need to acknowledge that price pressures remain elevated,” he said. “The battle against inflation continues, and to extend the military analogy a little bit, there’s a kind of fog of war… quite dense just at the moment.”
In response, Minister of Budget and Economic Planning, Senator Abubakar Bagudu, disagreed with the World Bank’s verdict.
“Is the projection of the 2025 budget ambitious? No, they are not. They are all modest,” he said, arguing that Nigeria’s oil production capacity exceeds 2.3 million barrels per day and that the budget reflects the country’s potential.
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“A budget should not be a reflection of our indulgences. It should be a reflection of our potential,” Bagudu added. “Mr President made it clear, all of us are going to be challenged to give our best.”
He also noted that Nigeria’s revenue-to-GDP and expenditure-to-GDP ratios had improved and said a national economic mapping initiative across 8,809 political wards would soon be launched.
“What we have been dealing with is a programme to ensure that all three tiers of government are working together to map economic opportunities in all the 8,809 wards,” he said.
Minister of Finance Wale Edun, speaking during a panel session, echoed the need for transparency, especially in oil revenue.
“We saw from the red areas on the chart that there is a need still to really push for transparency of fiscal data, and also transparency in the oil revenue sector,” he said.
CBN Governor Olayemi Cardoso committed to maintaining monetary stability and noted a decline in exchange rate volatility and expectations of moderating inflation.
“For any economy, you need stability for you to be able to grow,” he said.
Minister of Communications Bosun Tijani said foreign investment in Nigeria’s digital sector had risen from $22m in Q1 2023 to nearly $200m in Q1 2024.
“If we can drive investment in 90,000km of fibre-optic networks, then we can fiberize our towers and deliver world-class internet,” he said.
Plateau State Governor Caleb Mutfwang acknowledged increased revenues to states but warned that inflation and insecurity continue to strain spending.
Representing the private sector, UAC Foods MD Oluyemi Oloyede urged for policy consistency, saying: “You say $1tn economy by 2030. I need to know what the government will do, and not do, between now and then.”
He criticised regulatory bottlenecks, called for improved export policies, and demanded a “national culture of excellence.”
The session closed with stakeholders agreeing on the need for continued reforms, governance improvements, and strong coordination to achieve inclusive, private-sector-led growth.