Home » FINANCING » FG Projects N47.9 Trillion Budget for 2025, Setting $75 Per Barrel as Benchmark and Target 2.06 Million BPD Production

FG Projects N47.9 Trillion Budget for 2025, Setting $75 Per Barrel as Benchmark and Target 2.06 Million BPD Production

…….by Ben Ndubuwa….

The Federal Executive Council (FEC) has approved a proposed national budget of N47.9 trillion for the fiscal year 2025. This approval came after a meeting chaired by President Bola Tinubu on Thursday, with Atiku Bagudu, Minister of Budget and Economic Planning, briefing journalists about the decision. The proposal is part of the Medium-Term Expenditure Framework (MTEF) for the years 2025 to 2027, in line with the provisions of the Fiscal Responsibility Act of 2007.

Bagudu outlined that the fiscal objectives in the approved budget are “conservative,” aimed at ensuring that the government remains cautious in its financial planning. “We want to ensure that we study the course much as we believe the projections will be exceeded,” the minister said. He further explained that the budget, which will now be presented to the National Assembly for approval, includes new borrowings of N9.2 trillion to finance the deficit in 2025.

The MTEF, which sets out the government’s fiscal strategy for the medium term, includes key macroeconomic assumptions such as an oil price benchmark of $75 per barrel and an oil production target of 2.06 million barrels per day. The framework also sets an exchange rate of N1,400 to the US dollar and a projected GDP growth rate of 4.6 percent for the period.

For 2025, the total projected expenditure stands at N47.9 trillion, with a borrowing plan of N13.8 trillion, representing 3.87 percent of the GDP. “For the 2025-2027 period, the MTEF sets out parameters including an oil price benchmark of $75 per barrel for 2025, oil production of 2.06 million barrels a day, as well as an exchange rate of N1400 to the dollar and GDP growth of 4.6 percent,” Bagudu said.

The minister also discussed the fiscal strategy’s focus on sustainability, especially with regards to the deregulation of petroleum prices and exchange rates. The government has called for the Nigerian National Petroleum Company Limited (NNPCL) to reduce its oil and gas production costs, noting the importance of amending the Petroleum Industry Act 2021 to address risks associated with oil revenue generation.

Budgetary Priorities for 2025-2027

The MTEF outlines the government’s key priorities for the medium term, including efforts to combat inflation, strengthen economic resilience, and improve the business climate. One of the major objectives is to support vulnerable populations and stimulate high-employment sectors, particularly in agriculture and manufacturing.

Bagudu noted that despite global economic challenges, the Nigerian economy is on a positive trajectory. “The economy has grown for two consecutive quarters, with a 3.19 percent increase in real terms in the second quarter of 2024,” he said. However, the minister acknowledged that much work remains to be done to reduce inflation, which has continued to impact the cost of living for Nigerians.

The framework also includes a review of the 2024 budget implementation, with Bagudu highlighting both successes and challenges. While there has been progress in revenue collection and expenditure management, some targets have not been met. “Non-oil revenue streams have actually outperformed expectations,” the minister said.

Performance of the 2024 Budget

As of August 2024, actual spending had reached N16.98 trillion, falling short of the prorated target of N23.37 trillion. Debt servicing accounted for N7.41 trillion of the total expenditure, while N3.7 trillion was spent on personnel costs, including pensions. Capital projects received N3.65 trillion in releases, although the minister noted that delays in capital project execution were largely due to legacy issues and new procedures requiring capacity building for timely fund disbursement.

The 2024 budget was initially set at N28.75 trillion but was later amended by the National Assembly to N35.6 trillion, after adding N6.2 trillion to cover new and ongoing expenditures.

Next Steps for the MTEF

Bagudu confirmed that the MTEF, along with the Fiscal Strategy Paper (FSP), would be forwarded to the National Assembly by Monday, November 18, 2024. “We are submitting it, I believe, today [Friday] or, at the latest, on Monday,” he said. The document will be reviewed by lawmakers as part of the budget approval process.

Despite the late approval of the MTEF, Bagudu expressed confidence that the government would meet its target of maintaining a January-December fiscal year. “We are confident because we have built a respectable relationship with the National Assembly. We have narrowed the areas of misunderstanding, and because of that mutual respect, Mr. President is very transparent with the National Assembly leadership,” he explained. Bagudu emphasized the importance of continued cooperation between the executive and legislative arms of government to ensure a smooth budget approval process.

“We will cooperate fully with the National Assembly. The team led by the Coordinating Minister of the Economy has been mandated to engage with the National Assembly and answer all questions at the committee hearings,” he added.

With the National Assembly’s endorsement, the government is hopeful that the fiscal year 2025 budget will be finalized promptly, ensuring that the Nigerian economy remains on a positive trajectory despite global challenges.

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