Some economic experts have urged the fiscal and monetary authorities to brace for higher inflation in light of the passage of the 2025 Appropriation Bill by the National Assembly.
The economists expressed their thoughts in exclusive chats with DECENCY GLOBAL NEWS on Friday.
The National Assembly on Thursday passed the 2025 Appropriation Bill of N54.99tn, allocating N14.32tn for debt servicing and N13.64tn for recurrent expenditure covering salaries, overheads, and government operations.
Speaking with our correspondent, the Chief Economist at SPM Professionals, Paul Alaje, said the N54.99tn budget will come with trade-offs, with inflation as one of them.
It would be recalled that the FG has projected a 15 per cent inflation figure for 2025.
Alaje said, “The revenue authorities will have to go the extra mile. In terms of expenditure, it is quite expansionary, and then we should brace up for inflation in the coming period if we truly spend all of this money. The government is looking to reduce inflation to 15 per cent, but the same government is thinking of spending more. So, it’s not exactly at par with what the government is looking at in terms of inflation. That does not mean that we don’t need to spend more money. We even need to spend more, but it’s just that they must have consequences.
“In economics, there is trade. You cannot eat your cake and still claim it’s in your oven unless you want to bake another one. Two, there is a major risk of credit finance, and I doubt if we will be able to use revenue to finance this budget 100 per cent. Honestly, I have a huge concern about fiscal balance or revenue. I have huge revenue concerns. The budget has been passed in the opinion of the National Assembly; the field is right, but the concerns will remain.
“How are we going to get the funds to finance this project? One is a revenue gap. We know that the President has tried to push down debt service to revenue to about 67 per cent from 98 per cent but with this kind of spending, it can only go higher, because chances are very high that we are going to borrow, but with the look of things, that borrowing will increase because of what the National Assembly has passed. Three, the budget presented by Mr President was first N49tn, later N54.2tn, now N54.99 tn. So, as it increases, should the revenue points also increase?”
Speaking further on the rebasing of the Consumer Price Index by the National Bureau of Statistics, Alaje said it may have no serious impact on this kind of spending.
“From what is in the public domain, NBS wants to reduce the influence of food inflation, or overall inflation. NBS feels that food inflation does not have weight, even though I disagree to an extent. So when you reduce something that has 50 per cent or so to maybe 25 per cent or 30 or 20 per cent as the case may be, and you now use other components to have the influence on this, it will appear as though, in number terms, inflation has reduced, but commodity prices in the market remain the same.
“The rate of growth in inflation has not been targeted. If you must control inflation, it’s not going to come by merely adjusting numbers.”
The head of research at the Nigerian Economic Summit Group, Dr Joseph Ogebe, called for the involvement of the private sector in the implementation of the budget.
He said, “The 2025 approved budget of N54.9tn is the highest ever recorded in nominal terms. The increase in capital allocation is a welcome development, signalling a stronger commitment to infrastructure development. However, successful implementation of the capital budget—alongside private sector support—is essential to addressing Nigeria’s significant infrastructure gap.
“The high recurrent expenditure remains a concern, and efforts should focus on enhancing overall fiscal efficiency. In addition, increasing budgetary spending on social interventions is crucial to cushioning the effects of ongoing reform. Finally, the budget must emphasise the development of critical infrastructure to support businesses, unlock binding constraints to growth, and drive national development.”
