By Chinwendu Obienyi
With Nigeria already in the second quarter (Q2) of 2025, the country’s economic outlook remains uncertain amid falling crude oil prices and a significant slump in production.
This has led to concerns from many financial experts including the Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, who has urged the Federal Government to revisit its fiscal strategy to avoid deepening macroeconomic instability.
Speaking during the quarterly economic review of Nigeria’s scorecard on zoom and expectations for the country’s outlook yesterday, Chukwu noted that with oil prices hovering around $65 per barrel, well below the government’s benchmark, and daily crude production declining to about one million barrels, the 2025 budget of Africa’s second largest economy could rapidly become unachievable.
“It is that free crude which is the government’s share that is being hit the hardest. If prices stay below $65 per barrel, we lose about $10 per barrel on which the budget was built. That puts a major strain on our FX earnings, weakens our exchange rate, and threatens economic stability,” Chukwu explained.
Nigeria’s 2025 national budget estimates N19.6 trillion in oil revenue and N22 trillion from non-oil sources, but Chukwu notes that even the non-oil revenues are significantly tied to oil activity.
“We already said the fiscal plan was overly optimistic. Now, with the tariff war suppressing oil prices and our internal contradictions reducing output, the government must reset its expectations and adjust accordingly,” he said.
Chukwu warned that without a course correction, the federal government will be forced to borrow more, raising the national debt and debt servicing costs. This could also lead to a surge in liquidity, fueling inflation and putting more pressure on the naira.
“If we continue borrowing to fund a budget that is out of touch with revenue reality, we risk injecting money into the economy, raising inflation, weakening the naira, and increasing interest rates,” he said.
While the Central Bank of Nigeria (CBN) has successfully used monetary tools to retain foreign portfolio investment (FPI) inflows, Chukwu cautioned that escalating global risks could still trigger a withdrawal of funds from emerging markets like Nigeria.
According to him, the time has come for a complete review of Nigeria’s fiscal priorities. He urged the government to scale down or defer non-essential capital projects and instead pursue Public-Private Partnerships (PPP) to drive infrastructure development without compounding debt.
“We cannot sustain a N22 trillion capital budget under these conditions. The smart move is to offload some projects to private investors via PPPs. That way, we can continue infrastructure expansion without putting more pressure on public finances,” he advised.
He also emphasized the need to improve Nigeria’s attractiveness to foreign direct investment (FDI), which is more stable and less prone to sudden exits compared to FPIs.
Despite some signs of recovery—crude prices recently bounced from below $60 to $64—Chukwu maintained that the situation remains fragile, and Nigeria must not bank on a global rebound alone.
“We’re still heavily exposed to global dynamics. If trade tensions worsen or oil demand remains sluggish, our revenue and FX inflows will suffer even more. The only way forward is to realign our fiscal framework with reality,” he said.
As Q2 unfolds, Nigeria’s ability to recalibrate its spending plans and navigate these challenges will be critical in determining whether it stays afloat—or sinks deeper into economic strain.