Some financial experts have criticized Nigeria’s N47.9trn 2025 proposed budget for unrealistic assumptions, policy misalignment, and fiscal risks, urging realistic projections and strategic reforms.
In an exclusive interview with THE WHISTLER, the experts expressed concerns over the budget proposal for its unrealistic exchange rate projection of N1,400 to the dollar and overly optimistic $75 oil price benchmark, warning these could widen fiscal deficits and create economic vulnerabilities.
They described the expansionary nature of the budget as conflicting with Nigeria’s contractionary monetary policy, potentially fueling inflation and worsening citizens’ economic hardships.
The analysts emphasized the need for realistic budget assumptions, strategic borrowing for productive investments, and better allocation of funds to critical sectors to bridge Nigeria’s infrastructure gap and reduce over-reliance on volatile oil revenues.
Nigeria’s first Professor of Capital Market, Uche Uwaleke, expressed skepticism about key assumptions in the Federal Government’s proposed N47.9trn budget for 2025, particularly regarding the projected exchange rate of N1,400 to the dollar and the $75 per barrel oil price benchmark.
In an exclusive interview with THE WHISTLER, Uwaleke provided critical insights into the economic implications of these projections.
Uwaleke argued that the N1,400 to the dollar exchange rate assumption lacks feasibility within a one-year outlook for Nigeria’s foreign exchange (FX) flows.
He emphasized that such a projection introduces vulnerabilities in the implementation of the 2024 budget, potentially creating significant gaps between revenue generation and expenditure.
“The exchange rate assumption of N1,400 to the dollar is unrealistic based on a one-year outlook of FX flows, This could result in a slack in the 2024 budget implementation, leaving room for off-budget funds that may complicate fiscal discipline,” he stated.
The professor highlighted that FX management remains a major challenge for Nigeria, given the persistent pressures on external reserves and the lack of a diversified export base to generate substantial FX inflows.
On the proposed $75 per barrel oil price benchmark, Uwaleke noted the difficulty of accurately predicting global oil prices, given the volatile geopolitical climate.
“With the uncertainty surrounding global markets, especially with former President Donald Trump’s potential return to the U.S. presidency, the extent to which the U.S. can influence the Ukraine war and the Middle East crisis will play a significant role in determining oil prices,” he explained.
Uwaleke pointed out that while oil prices have been relatively stable in recent months, any escalation in geopolitical tensions could lead to significant price fluctuations. The $75 benchmark could be overly optimistic or conservative depending on how these dynamics unfold in the coming months.
The professor also raised concerns about the broader fiscal implications of these assumptions. He cautioned that an unrealistic exchange rate could further widen the fiscal deficit, while over-reliance on oil revenue might expose the budget to external shocks.
“Nigeria’s fiscal strategy must prioritize realistic projections that align with current economic realities,” Uwaleke advised. “Overambitious assumptions can undermine investor confidence and hinder effective budget implementation.”
To address these challenges, Uwaleke recommended a more conservative approach to budget assumptions, particularly for the exchange rate and oil benchmark. He also urged the Federal Government to accelerate efforts to diversify the economy and enhance non-oil revenue streams to reduce dependence on volatile oil earnings.
The Managing Director/CEO of Arthur Stevens Asset Management Limited and a former President of the Chartered Institute of Stockbrokers Olatunde Amolegbe emphasized that Nigeria’s ambition to become a productive economy necessitates a more robust budgetary approach. He cautioned against certain unrealistic assumptions in the 2025 Federal Government budget proposal.
Amolegbe underscored the importance of expansionary budgets in driving economic development, particularly given Nigeria’s significant infrastructure deficit.
“I am an advocate of expansionary budgets, especially considering our ambition to transform into a productive economy and the substantial infrastructural gap we need to bridge,” he stated.
He argued that Nigeria’s budget size is small compared to its peers, both on a per capita basis and in absolute terms.
“When compared to other African countries and globally, our budget size is not competitive. The issue isn’t the size of the budget but how we finance, allocate, and prioritize expenditures,” Amolegbe explained.
Amolegbe expressed reservations about the proposed exchange rate of N1,400 to the dollar in the budget, describing it as unrealistic and a potential source of significant funding gaps.
“Using an exchange rate of N1,400 looks unrealistic on the face of it. It already creates a substantial funding gap that will be challenging to bridge,” he said.
On the proposed oil price benchmark of $75 per barrel, Amolegbe noted that it aligns with the one-year average and could be considered realistic. However, he emphasized that financing the budget would remain a significant hurdle despite the potential benefits of recent policy reforms.
“The removal of fuel subsidies and efforts to ramp up crude production will make financing the budget somewhat easier, but there will still be a gap that will need to be financed through borrowing,” he explained.
Amolegbe highlighted that effective budget implementation would depend on better allocation and prioritization of spending. He called for a focus on critical sectors such as infrastructure, healthcare, and education to maximize the impact of budgetary resources.
While acknowledging the inevitability of borrowing to close funding gaps, Amolegbe stressed the importance of fiscal discipline and prudent debt management. “Borrowing must be strategic and focused on productive investments that can yield returns to service the debt and drive economic growth,” he advised.
Managing Director of Highcap Securities, Mr. David Adonri raised concerns over the proposed 2025 budget, describing its assumptions as “ambitious” and warning of its potential economic repercussions.
In his analysis, Adonri pointed out that the size of the proposed budget far exceeds the financial capacity of the government, leading to a substantial fiscal deficit.
“The ambitious nature of the assumptions underlying the 2025 proposed budget raises serious doubts about its feasibility,” he stated.
The financial expert criticized the budget’s expansionary stance, noting that it clashes with the Central Bank of Nigeria’s current contractionary monetary policy aimed at curbing inflation.