World Bank Flags Nigeria’s 2025 Budget as Overly Ambitious, Warns of Potential Reliance on CBN Financing

The World Bank has raised concerns over Nigeria’s proposed ₦47.9 trillion 2025 federal budget, describing it as overly ambitious and cautioning that the Federal Government may resort to the Central Bank of Nigeria’s (CBN) Ways and Means facility to bridge anticipated revenue shortfalls.

Key Concerns Highlighted:

Optimistic Revenue Projections: The budget anticipates generating over ₦30 trillion in revenue, underpinned by an oil price benchmark of $75 per barrel and a production target of 2.06 million barrels per day. However, analysts point out that Nigeria's oil production was approximately 1.4 million barrels per day as of October 2024, making the target appear overly optimistic.

Unrealistic Economic Assumptions: The Lagos Chamber of Commerce and Industry (LCCI) has criticized the budget's assumptions, particularly the projected exchange rate of ₦1,400 to the dollar and an inflation rate of 15.8%. Given that the exchange rate was above ₦1,600 and inflation stood at 33.88% as of October 2024, these projections are deemed unrealistic.

Rising Debt Servicing Costs: Debt servicing is projected to consume ₦15.38 trillion, accounting for 32.1% of the total budget. This figure surpasses the combined allocations for education (₦3.5 trillion) and health (₦2.48 trillion), raising concerns about the sustainability of such expenditure.

Potential Return to Ways and Means Financing: With a projected budget deficit of ₦13.8 trillion, there are fears that the government may revert to the CBN's Ways and Means facility to finance the gap. The World Bank has previously noted that excessive reliance on this facility has contributed to inflationary pressures and weakened confidence in the naira.

Calls for Fiscal Discipline:

Economic experts and institutions like the LCCI urge the Federal Government to exercise fiscal discipline, reassess its budgetary assumptions, and prioritize realistic revenue projections. They emphasize the need for structural reforms, efficient public spending, and the creation of an enabling environment for private sector growth to ensure sustainable economic development.

As Nigeria navigates its economic challenges, stakeholders stress the importance of aligning budgetary plans with current economic realities to avoid exacerbating fiscal imbalances and to foster long-term stability.