The Confounding Odyssey of the 2025 Budget
Postscript by Waziri Adio
Federal Government’s 2025 budget continued its fascinating journey last week. On 18th February, the National Assembly rescinded the budget that it had passed just five days earlier but was yet to be transmitted for presidential assent. It was a minor adjustment. To correct ‘some errors’, the legislators simply (and swiftly) re-assigned N500 billion from capital expenditure to recurrent expenditure. The other broad categories remain the same, and the size of the budget stays at N54.99 trillion, they said.
The adjustment is historic nonetheless. A rescinded budget has not been part of our lexicon in more than 25 years of this republic. So, this is another milestone recorded by the 2025 budget in its storied journey. A clean copy of the budget has not been sighted, and the approved appropriation bill is yet to be signed by the president. My sense is that we may not have seen the last of the twists and turns of this peculiar budget.
After my last week intervention on the 2025 budget process, someone sent me a copy of the House of Representatives’ supplementary order paper which contains the highlights of the approved budget. The 15-page document provides answers to a few of the questions that I posed last week. But most of the puzzles remain. Maybe the full budget (which typically runs into more than 2000 pages) will provide further illumination. However, the highlights throw up fresh questions of their own.
Let’s start with where some clarity has been provided. I had wondered how the legislators managed to reduce the provision for debt service to N14.32 trillion from N16.33 trillion initially proposed by the executive. As shown in the order paper, the legislators approved N7.19 trillion for domestic debt, N6.75 trillion for foreign debt and N377.30 billion for the sinking fund, whereas the president had proposed N8.20 trillion for domestic debt, N7.69 trillion for foreign debt and N430.27 billion for the sinking fund. A comparison of the two sets of figures shows how the legislators were able to reduce debt service by N2 trillion. But it is still not clear if they did this unilaterally or in consultation with the executive. Also, there is still the need to understand the basis of such a significant reduction, and if this will have immediate or future repercussions or not. Are we pushing some due obligations down the line or was the initial debt service estimate bloated?
I had also asked how the legislators were able to prune statutory transfers to N3.65 trillion from the N4.44 trillion proposed by the president. Statutory transfers are meant to be somewhat protected—some of them are fixed percentages of certain revenue handles. The order paper shows that the legislators increased and reduced some of the proposed sums under statutory transfers and are still able to slash almost N800 billion or about 18% off the original proposal. In a way, this is the surgical approach that the legislators should be taking to appropriation. But cutting the fat is not an occupation they fancy much.
The National Assembly did not increase or reduce its own statutory transfer of N344.85 billion. Or so it appears. But there is a N170 billion under capital supplementation for service wide vote for the National Assembly. So, there is about a 50% increase in the budget of the National Assembly without an obvious increase. You have to go several rows down to see where it is neatly nestled. By the way, this service wide vote was not part of the original proposal by the president. A legitimate question is how come legislators now need service wide votes? All expenditures by the National Assembly should be handled from its statutory transfer, except for some key capital projects that fall within the remit of the Federal Capital Development Authority (FCDA).
It is noteworthy that the legislators kept untouched the statutory transfers to the Basic Health Care Provision Fund (N298 billion), the National Human Rights Commission (N8 billion) and the Public Complaints Commission (N14 billion). That is good. But they reduced the statutory transfers for NASENI from N298 billion to N248 billion and for UBEC from N596 billion to N496 billion. However, they increased the transfers to National Judicial Council from N341 billion to N521 billion and for INEC from N40 billion to N140 billion. I am sure they have good explanations for these adjustments, but it will be good to know the basis of their decisions, including alignment with statutory percentages of certain revenue handles.
The most interesting part, for me, is that they took a scalpel to the statutory transfers for all the zonal development commissions. They did the reduction in this order: Niger Delta Development Commission (NDDC) from N776.53 billion to N626.53 billion; North East Development Commission (NEDC) from N290.99 billion to N240.99 billion; North West Development Commission (NWDC) from N585.93 billion to N145.61 billion; the South West Development Commission (SWDC) from N498.40 billion to N140 billion; and the South East Development Commission from N341.27 billion to N140 billion. Equal opportunity reduction, in a sense, though it will be good to know if the reductions are in alignment with expected fall in the attached revenues.
But it gets more interesting. The legislators allocated statutory transfers to two development commissions that were not in the original proposal by the executive. This brings to seven the number of zonal development commissions provided for in the 2025 budget. The North Central Development Commission (NCDC) and the South South Development Commission (SSDC) got N140 billion apiece.
Please note that the NCDC bill was signed into law by President Bola Tinubu on 4th February 2025. The president presented the budget proposal on 18th December 2024, which rightly had no provision for NCDC. The president sent a letter to the National Assembly on 5th February 2025, where he proposed additional revenue and expenditure of N4.53 trillion. This was a day after he signed the NCDC bill. It is doubtful that he included NCDC in the breakdown. It is possible NCDC was included in that list or it is possible that the legislators exercised their initiative or in consultation with the executive. In any case, this will be another record: a commission receiving budgetary allocation barely a week after the signing of its bill.
But that is not as record-breaking as the case of the SSDC. It is not clear how the SSDC is significantly different from NDDC (apart from that its coverage will be strictly for the South South zone, and not for all oil producing states, as NDDC covers Abia, Imo and Ondo that are from other zones). But that is not the point. As at today, SSDC is not a legal entity. The SSDC bill has not been signed into law. I think I understand the political consideration at play: development commissions have become the latest ploy for sharing the rapidly shrinking nation cake. So, everyone wants their slice of the cake before we get to the last crumb.
But it is quite odd that the National Assembly will make appropriation for an entity that does not exist in law yet. Is this anticipatory appropriation and is it allowed and what is the danger inherent in taking this kind of liberty? A neater approach would have been for the executive to be encouraged to bring a supplementary budget after the SSDC bill is signed into law. We are normalising many abnormalities, from the executive undertaking major projects without appropriation and with no questions asked by those with the powers of the purse to the legislators themselves making appropriation for an entity whose existence is not yet legally consummated. The persistent mockery being made of the budget process is simply astounding.
Another odd entry revealed in the order paper is the provision of N400 billion for light rail projects in four states: N150 billion to Kano State; N100 billion to Kaduna State; N100 billion to Ogun State; and N50 billion to Lagos State. Light rails are within cities and are thus state projects. There are strategically important federal rail lines crying for modernisation and expansion. Those should be the priority and the focus of the Federal Government. Yes, an argument can be made for the need for FG to support the development of critical infrastructure in key states, and this can include urban rail projects. But this should start with a clear and well-articulated policy framework that provides the rationale, the format, the eligibility criteria and the process for such an intervention.
Such a major policy decision should not just show up in the budget. For now, the allocation for light rail appears like a political settlement scheme or a belated attempt at regional balancing. They were not in the initial budget proposal by the president. Most likely, the Federal Government decided to support light rail in four states after the hoopla generated by the N146.14 billion included in the proposed budget of the Ministry of Transport as the counterpart funding by MOFI to the Lagos Greenline Metro Rail project.
But even the attempt at balancing falls flat. There is no prior document that articulates why the Federal Government can provide such a support, the criteria for selecting qualifying states, how states can apply to be considered, and if this will go round all the states or just a number of states per zone. On account of the haphazard approach, the discussion, even in the parliament, has moved from the propriety of a federal ministry providing funding to a state project to the slippery slope of deliberate neglect/marginalisation of certain zones by the Federal Government. This is unfortunate and could have been avoided if this had been more thoughtfully considered.
There are few other things peeking out. Even after the legislators rescinded the 2025 budget on Tuesday, capital expenditure still has the highest allocation. The N23.44 trillion allocated to capital is 42.63% of the budget. This is not just the highest amount but the highest percentage of the budget allocated to capital expenditure since 1999. Ordinarily, this should be celebrated, but certain things do not add up. There appears to be a deliberate attempt to big up the capital component of the budget. There are many items under capital supplementation that it will take a real stretch to capture as capital, except you are using the loose definition of working capital.
Some of these items include allocations to student loan scheme, consumer credit fund, refund to TETFUND, transfer to HYPPADEC (another development commission), national poverty reduction with growth strategy etc. It is noteworthy that capital supplementation (a recent and growing category in our budgets) got a 131% boost. The president proposed a total of N3.18 trillion as capital supplementation when he laid the budget before the parliamentarians on 18th December 2024 and the legislators approved N6.37 trillion for the same category on 13th February 2025. There are many items under capital that should invite greater scrutiny but which the legislators left untouched, including allocations to a hospital for NIA (N238.05 billion), for a building for FIRS (N50 billion) and for the take-off grant of a school of governance at NIPSS (N887.75 million).
Then, there is the issue of budget deficit. The math here is simply not ‘math-ing,’ as the younger ones say. The president mentioned a deficit of N13.08 trillion in his budget speech. The proposed budget on the website of the Budget Office of the Federation puts the budget deficit and the aggregate financing items at N13.39 trillion. The order paper containing the highlights of the approved budget maintains the deficit and the aggregate financing items at N13.39 trillion. But the National Assembly publicly announced a budget deficit of N13.08 trillion.
Apart from two different amounts featuring for the same items in different documents/pronouncements, I suspect the deficit is understated. And here, I am not talking of the eventual deficit in case ambitious revenue projection underperforms. The total revenue that can be publicly identified amounts to N40.88 trillion (the N36.35 trillion in the proposed budget—which included revenue of GOEs— and the N4.53 trillion additional revenue, which I am yet to see in the highlights in the order paper). If the total expenditure is N54.99 trillion and the total revenue is N40.88 trillion, then the deficit should be N14.11 trillion. So, there is a N1.03 trillion hanging somewhere. It is possible the full budget will clear the air, or this may be another error to be corrected or rescinded.
But the really intriguing part is that the National Assembly stated categorically (even when it doesn’t have to) that the N13.08 trillion deficit represents 1.52% of GDP. This contradicts the position in President Tinubu’s speech when he presented the budget proposal. “A total of N13.08 trillion, or 3.89% of GDP, will make up the budget deficit,” the president said on 18th December 2025. It is important to underscore that the president and the parliament are keeping to the same amount as the budget deficit for 2025: N13.08 trillion. So, it is still a mystery how the National Assembly arrived at a deficit-to-GDP of 1.52% but the president put the same at 3.89% of GDP.
As I stated last week, N13.08 trillion can only be 1.52% of GDP if Nigeria’s GDP has grown to N860 trillion. This will be a major leap, even with rebasing. The last full-year GDP figure published by the National Bureau of Statistics (NBS) is for 2023, and Nigeria’s nominal GDP was N234 trillion. In its October 2024 World Economic Outlook Database, IMF estimates Nigeria’s nominal GDP as N302 trillion in 2024 and as N351 trillion for 2025. If we use IMF’s estimate for 2025, our deficit-to-GDP will be 3.73%. So, it will be good to know where and how the National Assembly derived deficit-to-GDP at 1.52%, which it trumpeted as being within acceptable limit (a major claim, as the Fiscal Responsibility Act, 2007 stipulates 3% as the cap for Deficit-to-GDP).
If the legislators have been briefed by NBS on the rebased GDP, it is important to question the propriety and the haste by legislators to use data not yet publicly released by the national statistical agency. If the problem is that they mixed up their numbers, we have cause to worry about what else they are mixing up. But it seems to me they know what they are doing: there are games within a game going on here. Such indiscretions and political games chip away the credibility of official data. And that is such a terrible thing.
