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Daniel Adaji
The Nigerian Economic Summit Group (NESG) has raised alarm over persistent debt and revenue challenges in the Federal Government’s 2025 budget, warning that without urgent reforms, the budget may struggle to deliver the major economic boost the country desperately needs.
In its latest analysis titled “2025 FGN Budget Analysis: Can the Budget Deliver a Major Economic Boost?”, NESG stated, “The realisation of macroeconomic assumptions, efficiency of planned expenditures, and structure of revenue mobilisation raise important questions about the budget’s ability to achieve set targets.”
According to the document obtained by Pointblank News on Monday, the NESG noted that while Nigeria’s 2025 budget of N54.99tn shows a projected revenue increase to N41.91tn, the nation’s heavy debt servicing burden and weak revenue mobilisation continue to restrict fiscal flexibility.
About 50.8 per cent of the 2025 budget is dedicated to recurrent expenditure, primarily debt service and overheads, leaving limited room for growth-stimulating investments.
Since 2015, NESG observed Nigeria’s budgets have suffered from structural rigidity, with nearly 60 per cent of government spending consumed by debt and administrative costs.
“Public investment is often treated as a residual budget item,” the report stressed, warning that this practice hinders the country’s efforts to close its vast infrastructure gap.
Despite a marginal improvement—with 49.2 per cent allocated to capital expenditure—the Group said the allocation remains insufficient for Nigeria’s scale of development needs. Human capital investment also falls short, with per capita budget spending at just US$159.4 annually, far below peer countries like South Africa (US$1,957) and other African economies (around US$800).
The NESG flagged the country’s persistent revenue struggles as a major threat to budget implementation. Even with policy measures such as fuel subsidy removal and exchange rate unification boosting revenue in 2023 and 2024, high debt service costs continue to erode gains.
Nigeria’s debt-service-to-revenue ratio peaked at 84.7 per cent in 2020, easing slightly to 52.5 per cent in 2024 but still exerting serious pressure on government finances.
Between 2015 and 2024, Nigeria’s public debt ballooned from N12.6tn to N144.7tn, driven by heavy reliance on domestic and commercial loans at high interest rates. The report warned that external shocks, currency depreciation, and inflation could further complicate the debt landscape.
The NESG’s analysis called for a strategic rethinking of Nigeria’s fiscal approach, urging the government to prioritise long-term investments in infrastructure and social development rather than focusing predominantly on recurrent expenses.
It recommended improving budget execution, strengthening public investment management, implementing tax reforms, and enhancing transparency through timely publication of fiscal accounts.
“Ultimately, making the 2025 budget work for economic growth will require a whole-of-government commitment to prudent fiscal governance, implementation discipline, and political will to prioritise long-term national interests over short-term spending,” the NESG advised.
The NESG stressed that the 2025 budget must not just be a ritual of figures but a genuine driver of inclusive growth, job creation, and poverty reduction.