By Anthony Otaru, Abuja
President Bola Tinubu’s ambitious ₦49.74 trillion 2025 budget is facing growing headwinds as global crude oil prices slip below the federal government’s benchmark of $75 per barrel, raising alarm among economic experts who warn that key capital projects could be delayed or derailed, and new borrowings may become inevitable.
Recent data shows Nigeria’s key crude blends—Bonny Light, Brass River, and Qua Iboe—trading at an average of $72.50 per barrel, nearly $2.50 below the budget benchmark.
The dip in prices, primarily driven by tensions in the Middle East, including attacks on oil infrastructure in Iraq, underscores the volatility in global markets and the fragility of oil-dependent economies like Nigeria’s.
*‘Capital projects may stall, borrowing looms amid rising fiscal uncertainty’
Despite a projected GDP growth of 3.4 per cent in 2025, buoyed by increased oil production, the impact of domestic refineries, and the resilience of the services sector, experts caution that rising debt obligations, recurrent expenditures, and poor revenue diversification could compromise capital development and fiscal sustainability.
Renowned development economist and lead consultant to the ECOWAS Commission, Professor Ben Ife, criticised the federal government’s oil benchmark as “unrealistic,” noting that global projections for crude prices have hovered around $65 per barrel over the past three years.
“Setting an overestimated benchmark leaves no buffer for savings or the Excess Crude Account. Instead, it inflates the deficit beyond the 4% legal limit set by the Fiscal Responsibility Act (FRA) 2007, enabling lawmakers to insert self-serving projects,” Ife argued.
He further lamented the prioritisation of salaries, pensions, debt servicing, and defence over capital investment.
“As of July 2025, there have been no capital releases for this year’s budget. Meanwhile, the 2024 capital budget has been extended to December 2025. This is sheer fiscal recklessness,” he said.
Ife warned that although borrowing can be justified for economically viable and socially beneficial projects, the government’s borrowing pattern lacks transparency and violates key provisions of the FRA 2007.
“Hundreds of billions are wasted under the guise of fighting corruption, while public servants continue to breach financial accountability laws,” he noted. “If borrowing must continue, it should be on concessionary terms, guided by proper cost-benefit analysis—especially for infrastructure projects with sustainable revenue potential.”
Emeritus Professor of Economics and Public Policy, Akpan Hogan Ekpo of the University of Uyo, echoed similar concerns.
He urged the federal government to swiftly diversify its revenue base and reallocate available funds to priority capital projects, such as power infrastructure.
“We’re already in the second half of the year, and most capital projects remain unfunded. The 2025 budget is struggling because of delays in releases and overreliance on inherently unstable oil revenues,” he stated.
According to Ekpo, the imbalance between recurrent and capital spending, combined with slow implementation of tax reforms, has left the budget vulnerable.
“While new tax laws are expected to take effect in 2026, they offer no immediate relief. We must urgently cut the cost of governance and redirect funds to development needs,” he said.
Ekpo also criticised the continued expansion of Ministries, Departments and Agencies (MDAs), warning that such expansion increases overhead costs without commensurate development outcomes.
“It makes no sense to enlarge the bureaucracy when we’re battling fiscal pressure. The solution lies in reducing waste and shoring up domestic revenue,” he noted.
On foreign borrowings, Ekpo said, “Borrowing without transparency or clear economic returns is dangerous. Nigeria’s debt-to-revenue ratio is a more crucial metric, not just the size of the debt. Government must tread carefully to avoid mortgaging the future.”
Adding his voice, Prof Sheriffdeen Tella, a public finance expert, advised the Tinubu administration to review its expenditure framework urgently.
“It’s better to reduce unnecessary spending than to take on new debts. If borrowing becomes inevitable, internal borrowing should be prioritised over external sources to avoid debt overhang,” Tella advised.
He suggested policy initiatives to stimulate foreign direct investment, boost local production, and tame inflation as long-term solutions to Nigeria’s fiscal woes.
“The government should focus on increasing domestic output, cutting unemployment, and strengthening the naira. Only then can we reduce dependence on volatile oil revenues,” he said.
Tella and other economists also urged the federal government to explore underutilised sources of development financing, such as Nigeria’s contributions to the African Development Bank’s Trust Fund, instead of relying on the World Bank, IMF, or Eurobonds.
Tinubu’s 2025 budget, which saw a 41.9 per cent increase over 2024, was initially presented as a roadmap to economic recovery and growth.
However, the latest global oil trends, coupled with domestic structural constraints, are testing its assumptions and resilience.
Though inflation showed signs of easing in May 2025, dropping to 22.97% from 23.71% in April according to the National Bureau of Statistics (NBS), analysts say this marginal improvement is insufficient to offset the broader challenges posed by weak capital execution and policy bottlenecks.
With time running out in the fiscal year, stakeholders are urging the Tinubu administration to recalibrate spending priorities, expedite budget releases, and adopt a transparent, reform-oriented budgetary path that will foster investor confidence and shield future generations from unsustainable debt.
