2025 Budget: Tinubu Proposes N47.9 Trillion, Earmarks N15.18 Trillion for Debt Servicing

Debt servicing is expected to gulp N15.18 trillion in the 2025 budget tagged “Budget of Restoration: Securing Peace, Rebuilding Prosperity” worth N47.90 trillion, presented to federal lawmakers by President Tinubu on Wednesday.

This figure represents an increase of about 85% compared to what was allocated to debt servicing under the 2024 budget and is approximately 31.69% of the current budget.

Nigeria’s Debt Servicing Problem

The percentage of the 2025 budget expected to be spent on debt servicing points to Nigeria’s ongoing battle to bring down its debt servicing ratio.

Nigeria’s debt profile currently stands at approximately $91bn and as a result of the country’s debt profile remaining dangerously high over the years, the country has had to allocate a significant portion of its revenue to service National and foreign debts.

It is instructive to note that in the proposed 2025 budget, the amount set aside for debt servicing is higher than the amounts allocated to Security, Infrastructure, Health, and Education combined which points to a significant challenge in the country.

Key Takeaways From the Budget

Revenue

The government expects a revenue of N34 trillion from diverse sources including borrowing, taxes, and oil revenue to finance the 2025 budget. This estimated revenue is almost double the N18. 32 trillion revenue that was contained in the 2024 budget.

Expenditure

Proposed Government expenditure for 2025 was put at N47.90 trillion, a figure way higher than the N27.5 trillion in the 2024 budget. A breakdown of the proposed expenditure figures reveals that of the recurrent expenditure, debt serving took N15.18trillion, ₦34 billion of the N3.5Trillion earmarked for education was allocated for the Education Loan Fund while defense and security took N4.91Trillion.

Personnel and pension costs are estimated at N9.64tn, reflecting a 58.7 percent increase from 2024, largely due to the implementation of the new minimum wage while N282.65Billion was also allocated for the Basic Healthcare Fund to provide operational support for primary healthcare centers across the country.

Of the N16.48 trillion (34.4%) of the total budget for capital expenditure, N4.06 trillion was set aside for infrastructural development with a special focus on completing ongoing projects rather than initiating new ones.

Sectoral Outlook

In identification of Nigeria’s security challenges, the budget provides that N4.91 trillion be allocated to Defense and Security, 4.06 trillion be allocated to Infrastructure, 2.48 trillion to Health, and 3.5 trillion to Education.

Speaking on this, president Tinubu noted his administration had “significantly increased funding for the military, paramilitary, and Police Force to secure the nation, protect our borders, and consolidate government control over every inch of our national territory.”.

On infrastructure, he stated “When we launched the Renewed Hope Infrastructure Development Fund, it was with the conviction that infrastructure remains the backbone of every thriving economy.

“We are accelerating investments in energy, transport, and public works. By leveraging private capital, we hope to complete key projects that drive growth and create jobs.”

“In the 2025 Budget, we have allocated N826.90 billion for infrastructure development in the educational sector, including allocations for the Universal Basic Education (UBEC) and nine new higher educational institutions,” he said.

For healthcare, Tinubu emphasized the importance of Universal Health Coverage initiatives and announced an allocation of N402 billion for infrastructure investments in the health sector, with an additional N282.65 billion for the Basic Health Care Fund.

Key Projections of The Budget

President Tinubu during the budget presentation projected in 2025, the country’s inflation rate would drop from 34.6% to 15% while the exchange rate is expected to drop to N1500/$ from N1700/$. The budget also estimates that crude oil production would hit 2.06 million barrels per day.

 

Subscribe to Notifications