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From Ndubuisi Orji, Abuja
Former Vice President, Atiku Abubakar, has expressed misgivings over the capacity of 2025 budget presented by President Bola Tinubu to a joint session of the National Assembly, last week, to foster sustainable economic growth in the country.
Atiku, in a statement yesterday, predicated his pessimism on alleged its weak budgetary foundations, disproportionate debt servicing, sustainable government expenditure, insufficient capital investment and regressive taxation and economic strain.
President Tinubu had noted that the government was targeting N34.82 trillion in revenue to fund the N49.7 trillion budget, which N15.81 trillion is for debt servicing and a total of deficit N13.08 trillion or 3.89 percent of GDP.
However, Atiku noted that N13 trillion deficit, in the Appropriation Bill, reflects that it is “business as usual” in the Federal Government fiscal practices.
According to him, this is a continuation of a persistent pattern of the All Progressives Congress (APC) led Federal Government since 2016, where budget deficits and reliance on external borrowing has been a constant feature.
He noted that in a bid to bridge the gap, the government is planning to secure over N13 trillion in new loans, which includes N9 trillion in direct borrow
ings and N4 trillion in project-specific loans.
Atiku stated that “this borrowing strategy mirrors the approach of previous administrations, resulting in rising public debt and exacerbating the attendant risks related to interest payments and foreign exchange exposure.”
Consequently, the former vice president posited that “the 2025 budget’s capacity to foster sustainable economic growth and tackle Nigeria’s deep-rooted challenges is questionable.
This, according to him, is because the 2024 budget’s underperformance signals poor budgetary execution.
“By Q3 of the fiscal year, less than 35 percent of the allocated capital expenditure for MDAs had been disbursed, despite claims of 85 percent budget execution. This underperformance in capital spending, crucial for fostering economic transformation, raises concerns about the execution of the 2025 budget.
“Debt servicing, which accounts for N15.8 trillion (33 percent of the total expenditure), is nearly equal to planned capital expenditure (N16 trillion, or 34 percent). Moreover, debt servicing surpasses spending on key priority sectors such as defence (N4.91 trillion), infrastructure (N4.06 trillion), education (N3.52 trillion), and health (N2.4 trillion). This imbalance will likely crowd out essential investments and perpetuate a cycle of increasing borrowing and debt accumulation, undermining fiscal stability.
“The government’s recurrent expenditure remains disproportionately high, with over N14 trillion (30 percent of the budget) allocated to operating an oversized bureaucracy and supporting inefficient public enterprises. The lack of concrete steps to curb wastage and enhance the efficiency of public spending exacerbates the fiscal challenges, leaving limited resources for development.”
Atiku added that “after accounting for debt servicing and recurrent expenditure, the remaining allocation for capital spending, ranging from 25 percent to 34 percent of the total budget, is insufficient to address Nigeria’s infrastructure deficit and stimulate growth. This equates to an average capital allocation of approximately N80,000 (US$45) per capita, insufficient to meet the demands of a nation grappling with slow growth and infrastructural underdevelopment.
“The administration’s decision to increase the VAT rate from 7.5 percent to 10 percent is a retrogressive measure that will exacerbate the cost-of-living crisis and impede economic growth. By imposing additional tax burdens on an already struggling populace while failing to address governance inefficiencies, the government risks stifling domestic consumption and further deepening economic hardship.
“The 2025 budget lacks the structural reforms and fiscal discipline required to address Nigeria’s multifaceted economic challenges. To enhance the budget’s credibility, the administration must prioritize the reduction of inefficiencies in government operations, tackle contract inflation, and focus on long-term fiscal sustainability rather than perpetuating unsustainable borrowing and recurrent spending patterns. A shift towards a more disciplined and growth-oriented fiscal policy is essential for the nation’s economic recovery.”
