President Bola Tinubu has officially signed the N54.99 trillion ($36.6 billion) 2025 Appropriation Bill into law, marking a significant milestone in Nigeria’s fiscal planning. The budget was passed by the National Assembly on February 13, 2025, after an increase was made from the initially proposed N49.7 trillion, reflecting higher anticipated revenues from key agencies like the Federal Inland Revenue Service and Nigeria Customs Service.
The budget targets several critical sectors including security, infrastructure, education, and health. A key allocation of $200 million is set aside to mitigate the impact of recent reductions in U.S. health aid. With ambitious economic assumptions, the government is aiming for a crude oil production target of 2.06 million barrels per day at a benchmark price of $75 per barrel. The exchange rate is projected at ₦1,500 to the U.S. dollar, and the government is targeting a reduction in inflation from 34.8% to 15% within the year.
A major aspect of the fiscal strategy is tax reform, with plans to increase VAT to 12.5% by 2026, while exempting essential goods like food and medicine to ease household burdens. The reform also includes reallocating VAT revenues to favor states that generate more, which has sparked debates over the potential for regional economic disparities.
The 2025 budget represents a 99.96% increase from the 2024 Budget of N27.5 trillion, reflecting a significant scale-up in spending and investment, albeit with an ambitious set of economic assumptions. This budget is seen as a crucial tool to address the nation’s ongoing challenges, but its effectiveness will depend largely on the government’s ability to meet revenue targets and manage the expected inflationary pressures.
The ambitious fiscal outlook raises questions about Nigeria’s ability to balance these goals while avoiding further economic strain. Do you think this budget is realistic, or could it face challenges due to the country’s complex economic environment?
