Economic experts and financial sector analysts have advocated strategic asset divestment and public-private partnerships to fund critical projects and improve fiscal stability amidst rising inflation
and currency devaluation concerns President Bola Tinubu’s N49.7 trillion budget for 2025, presented as a “Budget of Restoration,” is being scrutinized by analysts who suggest selling national assets to alleviate Nigeria’s escalating debt burden.
With debt servicing projected at N15.81 trillion, experts warn that the ambitious budget, which prioritises defence, infrastructure, and social services, may not be sustainable under current economic conditions.
As the federal government plans to raise N36.35 trillion to meet its N49.7 trillion budget, there are concerns over its ability to raise the needed revenue.
While the federal government sources funding to implement its 2025 national budget, PWC and Agusto & Co. have called for the sale of assets to reduce the country’s financial pressures.
With a fiscal deficit of over N13 trillion, the government plans to raise funds from local and foreign markets.
In its 2025 Economic Outlook for Nigeria, Agusto & Co. projected that the country’s borrowings will reach nearly N15 trillion in the year.
However, according to PWC’s report ‘Nigeria’s 2025 Budget and Economic Outlook, expansive borrowing will put financial strains on the government if it is not accompanied by growth and development.
Jointly, both PWC and Agusto believe the government’s ambitious revenue target may not be met.
With the tax reform, the government envisages higher tax revenue in 2025.
According to PWC’s report, while revenue generation had significantly improved, driven by higher tax revenues and enhanced oil production, the revenue target of N36.35 trillion is unlikely to be met due to oil revenue constraints and a low tax base.
This was also the view at Agusto, as the company, in its economic outlook for the country, anticipated that government revenue collections would fall short of projected targets, achieving around 80 per cent of the estimated N27 trillion in the best-case scenario.
“This revenue shortfall is likely to exert significant pressure on capital expenditure, limiting it to circa N11 trillion, 69 per cent of the budgeted N16.48 trillion. This projected outcome aligns with the historical trend of capital expenditure implementation rates consistently falling below 70 per cent.
“A closer examination of Nigeria’s 2025 fiscal plan reveals an ambitious expenditure blueprint of N49.74 trillion, to be funded by a projected revenue target of N35.05 trillion and borrowings of N14.94 trillion, equivalent to 3.89 per cent of estimated GDP. While this expansive fiscal approach aims to stimulate economic growth, several underlying assumptions in the spending framework appear overly optimistic.
“Without a significant increase in revenue, debt service obligations, projected at N16.3 trillion in 2025, will continue to crowd out critical spending on defence, infrastructure, education, healthcare and security, which collectively account for N14 trillion in the 2025 budget.
“Worryingly, debt servicing consumed 147 per cent of retained revenue in 2024, up from 132 per cent in 2023, underscoring the growing strain on fiscal sustainability. While the upcoming GDP rebasing exercise may improve GDP-linked debt ratios, it will do little to address Nigeria’s underlying fiscal fragility,” it pointed out.
Noting that rising debt risks in the country may reduce access to credit for private investment, PWC, in its report, said, “rising bilateral and multilateral debt in Nigeria indicates potential future financial pressure if not matched by economic growth and revenue generation, highlighting significant debt sustainability issues.”
The PWC report posited that fiscal consolidation, privatisation, and sell-downs of underperforming assets are expected to evolve as a key strategy in Nigeria’s revenue generation plan in 2025.
“This could reduce fiscal deficits and increase non-debt revenue, enhancing economic stability and growth in 2025. Government revenue is expected to grow in 2025 due to government reforms; however, achieving the ambitious target of N36.35 trillion will require significant effort.
“Fiscal pressures may persist in 2025 due to rising debt service obligations, increased government spending, and limited revenue mobilisation. Addressing these challenges will require urgent efforts
to enhance revenue generation and implement fiscal consolidation measures,” it stressed.
This was also the view at Agusto & Co. In its outlook, the company expressed the belief that the ongoing efforts at tax reform are necessary to stir Nigeria down the path of fiscal stability, and the benefits will materialise in the medium term.
“However, the Federal Government requires an immediate positive revenue shock. We believe it may consider selling state-owned assets, including its stake in Joint Venture (JV) oil assets. Such a strategic
move could provide a significant and immediate fiscal boost, bolstering foreign exchange reserves and supporting exchange rate stability. This, in turn, would contribute to mitigating cost-push inflationary pressures,” it noted,
It noted that 2025 exchange rate dynamics will influence total debt, with further naira devaluation increasing external debt burdens.
“The oversubscription of Nigeria’s $2.2 billion Eurobond, with a peak order book of over $9 billion, highlights investor confidence but adds to the debt load. Reliance on debt instruments without matching revenue-generating investments risks crowding out private sector investment and worsening debt sustainability in the long term,” it noted.
