News Investigators/ A Public Finance Management and Governance Expert says the increase in Nigeria’s proposed 2025 budget has potential benefits and risks for the economy, fiscal sustainability and key economic indices.
Benjamin Ekeyi said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Sunday while reacting to the increased budget.
NAN recalls that President Bola Tinubu, in separate letters to the Senate and House of Representatives, increased the proposed 2025 budget from N49.7 trillion to N54.2 trillion, citing additional revenues generated by key government agencies.
Tinubu said that the increase resulted from an additional N1.4 trillion in revenue generated from the Federal Inland Revenue Service (FIRS), N1.2 trillion from the Nigeria Customs Service (NCS), and N1.8 trillion generated by other government-owned agencies.
Mr Ekeyi said the increased budget could positively impact Nigeria’s economic growth and public service as well as engender investor confidence.
He explained that increased spending could stimulate Nigeria’s Gross Domestic Product (GDP), create jobs and improve public services in health, education and infrastructure.
“If the budget is well-implemented, it may signal government commitment to development, thereby attracting investors.”
Mr Ekeyi, however, said the negative impacts of the increased budget could lead to inflation and exchange rate volatility.
“Increased spending if not matched by productivity gains, may worsen inflation which is currently above 29 per cent and put pressure on the naira.”
He also said that there could be implementation and corruption risks with the increased budget.
“Without accountability, increased spending may not translate into tangible benefits due to poor budget execution and corruption.”
Mr Ekeyi said that the key economic indices that would be affected by the increased budget included fiscal deficit, inflation and interest rates.
According to him, a widening deficit can lead to credit rating downgrades and higher borrowing costs.
“If inflation rises, to curb it, the Central Bank of Nigeria (CBN) may raise interest rates, making borrowing costlier for businesses and individuals.”
He, therefore, said there was the need to boost revenue generation, expand the nation’s tax base, improving tax collection and reducing reliance on oil.
“The Federal Government must ensure that the projected revenue from FIRS, Customs and other revenue generating agencies are effectively harnessed.”
He also recommended that the government improve its spending efficiency by strengthening accountability, prioritising high-impact projects and curbing corruption and mismanagement.
Mr Ekeyi said that the Federal Government should also manage debt responsibly by favouring only concessional loans and developing a clear debt management strategy.
According to him,the Federal Government should stabilise inflation and exchange rates by ensuring coordination between fiscal and monetary policies.
“The budget increase can drive growth and development but also carries risks, particularly regarding inflation and corruption.
“Effective revenue mobilisation, spending efficiency and debt management are crucial for the budget to have a positive long-term impact,” he said.
NAN
