2025 budget: Will Nigeria balance growth, fiscal stability & tame inflation?

Nigeria's parliament recently passed the 2025 Appropriation Bill of 55 trillion naira, sparking mixed reactions among analysts and experts. With a significant allocation of 14.3 trillion naira for debt servicing and 13.6 trillion naira for recurrent expenditure, concerns have been raised regarding the country's deficit financing strategy and inflationary pressures. Tilewa Adebajo, the CEO of CFG Advisory, shared insights on the challenges ahead and the necessary steps to stimulate growth, curb inflation, and achieve fiscal stability. Adebajo highlighted the implications of the budget increase, stating that while it signals progress, it also raises deficit financing requirements by an additional 6 trillion naira. Nigeria's cumulative deficits over the past three years have reached approximately 36 trillion naira, with a growing debt profile approaching 150 trillion naira. The struggle to meet revenue targets and capital expenditure goals remains a significant hurdle, as past budget performances have fallen short. Achieving the ambitious target of a $1 trillion economy by next year requires sustainable policies and concerted efforts to drive economic growth. Regarding the impending release of Nigeria's rebased GDP figures by the National Bureau of Statistics, Adebajo emphasized the importance of clarifying inflation targets and conducting a thorough review of the economy. The Central Bank of Nigeria's inflation target for the year remains uncertain, making the upcoming Monetary Policy Committee meeting crucial for reassessing economic stability and setting realistic targets. The recent stability in petroleum prices and cost-push inflation factors call for a comprehensive evaluation to address market expectations. In light of the Naira's commendable appreciation and efforts to improve foreign exchange market transparency, Adebajo expressed optimism about sustaining the currency's upward trajectory. The introduction of the Bloomberg trading platform and new foreign exchange guidelines have enhanced market accountability and price discovery. While these developments signal progress, continuous efforts are crucial to ensure market stability and bolster investor confidence. As Nigeria navigates the complex dynamics of economic growth, inflation management, and fiscal stability, stakeholders emphasize the need for strategic policies, prudent financial management, and transparent market practices. The path ahead requires collaborative efforts from government institutions, regulatory bodies, and industry experts to chart a sustainable course for Nigeria's economic future.