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…Reserves hit $42bn
By Chinwendu Obienyi
President Bola Tinubu’s 2025 budget presentation has drawn mixed reactions, with optimism tempered by significant skepticism regarding inflation, exchange rate projections, and execution risks.
The budget, termed the “Budget of Restoration,” totals N47.9 trillion, with a significant emphasis on capital expenditure (N16.4 trillion) to drive infrastructure, health, and education development.
Tinubu whilst presenting the 2025 budget to the Senate yesterday, explained that the budget is intended to foster inclusion, growth and promote equitable distribution of income. He stated that Nigerians would soon experience positive development while adding that the country’s indices show growth recorded during his administration so far.
He revealed that the country’s foreign reserves have hit nearly $42 billion this month from negative numbers seen before he assumed office in May 2023, providing a robust buffer against external shocks.
This suggests that the country’s reserves, which stood at $40 billion in early November, according to the Central Bank of Nigeria (CBN)’s Governor, Olayemi Cardoso, has surged to its highest level in almost three years.
Tinubu also added that the 2025 budget is not another statement, but one that calls for action.
“Our nation faces existential threats from corruption and other threats,” he said, noting that Nigerians must re-write the narrative of the nation, with every leader and every citizen playing their part. He said, “The time to act is now. The time to support and promote investments in every sector is now.”
The President also expressed optimism that the inflation rate which is currently at 34% will drop to 15% next year while exchange rates are projected to stabilize, with the official rate set far below prevailing parallel market rates.
Defence and security, infrastructure, health and education have the highest allocation in the N47.9 trillion 2025 budget proposals which President Bola Tinubu presented to the National Assembly.
The budget proposes N4.51 trillion for defence and security, N4.06 trillion for infrastructure, N2.48 trillion for health and N3.5 trillion for education. These, he said, are key priority areas in the budget.
He assured that the budget will pave the way for Nigeria’s economic recovery and growth.
But experts who spoke to Daily Sun via telephone, expressed doubt on the feasibility of bringing inflation down to 15% given persistent structural issues, including high food prices and FX volatility as well as meeting the 2.06mbpd target for crude oil production
According to them, debt servicing (N15.38 trillion) which dominated the budget, leaves limited fiscal room for critical developmental projects and that the N9.22 trillion borrowing plan which was proposed, raises concerns about Nigeria’s long-term debt sustainability.
Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, highlighted that the budgeted crude oil production target reflects a nearly 25% increase from current levels, which he deems overly ambitious but optimistic.
Questioning the crude oil benchmark of $75 per barrel, citing global uncertainties, Chukwu noted that the impact of Donald Trump’s U.S. presidency, which could lead to increased American crude production and potential collaboration with Saudi Arabia to disrupt alliances that have kept prices high and this could push crude prices below $75 per barrel.
He said, “Today we know that Donald Trump is the new President-elect of the U.S and we know he does not believe in climate change and so we know he will push for an increase in the American crude oil production and might work with Saudi Arabia to disrupt the clause alliance that might have kept crude price artificially high.
Thus if that is the expectations globally, then we should expect that crude oil will trade below $75 per barrel. Thus the key assumptions could mess up the entire revenue generation which means that the budget deficit of N10.8 trillion may be exceeded and that could lead to some distortion in the economic environment”.
