Atiku Abubakar, former vice-president, says the proposed 2025 budget is inadequate to foster sustainable economic growth and curtail Nigeria’s deep-rooted challenges.
In a statement on Sunday, Abubakar said the budget shows a
business-as-usual fiscal practice and increases Nigeria’s external debt burden.
“The 2025 federal budget, amounting to N48 trillion with a
revenue forecast of N35 trillion, resulting in a deficit exceeding N13 trillion
or 4% of GDP, reflects a continuation of business-as-usual fiscal practices,”
he said.
“This represents a persistent trend under the APC-led
administration since 2016, wherein budget deficits have been consistently
presented, accompanied by an increasing reliance on external borrowing.
“To bridge this fiscal gap, the administration plans to
secure over N13 trillion in new borrowings, including N9 trillion in direct
borrowings and N4 trillion in project-specific loans.”
Abubakar said the borrowing strategy is similar to the
approach of previous administrations, increasing public debt and exacerbating
the attendant risks related to interest payments and foreign exchange (FX)
exposure.
‘WEAKENED BUDGETARY FOUNDATIONS, DISPROPORTIONATE DEBT
SERVICING’
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The former vice-president further highlighted lapses
identified in the budget.
“Weak Budgetary Foundations: The 2024 budget’s
underperformance signals poor budgetary execution. By Q3 of the fiscal year,
less than 35% of the allocated capital expenditure for MDAs had been disbursed,
despite claims of 85% budget execution,” he said.
He said the underperformance in capital spending, crucial
for fostering economic transformation, raises concerns about the execution of
the 2025 budget.
“Disproportionate Debt Servicing: Debt servicing, which
accounts for N15.8 trillion (33% of the total expenditure), is nearly equal to
planned capital expenditure (N16 trillion, or 34%),” Abubakar said.
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“Moreover, debt servicing surpasses spending on key priority
sectors such as defence (N4.91 trillion), infrastructure (N4.06 trillion),
education (N3.52 trillion), and health (N2.4 trillion).”
He said the imbalance would likely crowd out essential
investments and perpetuate a cycle of rising borrowing and debt accumulation,
threatening fiscal stability.
“Unsustainable Government Expenditure: The government’s
recurrent expenditure remains disproportionately high, with over N14 trillion
(30% of the budget) allocated to operating an oversized bureaucracy and
supporting inefficient public enterprises,” Abubakar said.
He added that the “lack of concrete steps to curb wastage
and enhance the efficiency of public spending exacerbates the fiscal
challenges, leaving limited resources for development”.
“Insufficient Capital Investment: After accounting for debt
servicing and recurrent expenditure, the remaining allocation for capital
spending, ranging from 25% to 34% of the total budget, is insufficient to
address Nigeria’s infrastructure deficit and stimulate growth,” the politician
said.
He said it amounts to an average capital allocation of about
N80,000 ($45) per capita, insufficient to meet the demands of a country
“grappling with slow growth and infrastructural underdevelopment”.
“Regressive Taxation and Economic Strain: The administration’s
decision to increase the VAT rate from 7.5% to 10% is a retrogressive measure
that will exacerbate the cost-of-living crisis and impede economic growth,”
Abubakar said.
He said by imposing additional tax burdens on an already
struggling populace while “failing to address governance inefficiencies,” the
government risks stifling domestic consumption and further exacerbating
economic hardship.
‘2025 BUDGET LACKS
STRUCTURAL BALANCE’
Abubakar said the 2025 budget lacks the “structural reforms and fiscal discipline” required to address Nigeria’s multiple economic challenges.
“To enhance the budget’s credibility, the administration
must prioritize the reduction of inefficiencies in government operations,
tackle contract inflation, and focus on long-term fiscal sustainability rather
than perpetuating unsustainable borrowing and recurrent spending patterns,” he
said.
Abubakar said a shift towards a more disciplined and
growth-oriented fiscal policy is essential for the nation’s economic recovery.
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