The federal government has been advised to review its N54.99tn ($36.6bn) 2025 budget in line with economic realities induced by the US tariff war.
The Senior Economist and Partner at SPM Professionals, Paul Alaje, who said this also added that the tariff war will lead to imported inflation in Nigeria as an import-dependent nation.
President Donald Trump’s tariffs on countries have sent a shock wave across the globe, leading to a decline in crude prices and stock markets.
In Nigeria, the impact is being felt in the decline in the value of the naira as a result of a fall in crude oil prices to around $60 per barrel.
Nigeria’s 2025 budget is built around crude oil production target of 2.06 million barrels per day and a benchmark oil price of $75 per barrel and a projected exchange rate of N1500/$1.
The inflation assumption for the budget is 15 per cent while GDP growth rate was projected at 4.6 per cent.
A breakdown showed debt servicing of N14.32tn, capital expenditure N23.96tn, recurrent expenditure N13.64tn, and statutory transfers N3.65tn.
Alaje said, “First of all, we need to know that it’s important for us to go and perhaps rejig the budget.
“If the price of crude drops down to $40, I tell you Nigeria cannot survive it. Of the reality of today, look at our budget, over $30bn.
“And the assumption is over $70 per barrel. As we speak, the price is dwindling, and not just in the oil market, we have seen what happened on the capital market around the world, because of the tariff war, and not all countries have responded yet.”
Alaje said achieving an inflation of 15 per cent based on the old inflation methodology is not realistic.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, gave a hint during a Corporate Governance Forum organised by the Ministry of Finance Incorporated (MOFI) in Abuja about strategies the government is adopting to curb the tariff effect.
“We are also focusing on non-oil revenue mobilization by FIRS and Customs.
“Budget adjustment and prioritization where possible, and also innovative non-debt financing strategies,” Edun hinted.
Alaje said that the government may result into excessive borrowings if it fails to cut the budget.
He said “Talking about revenue targets, it’s obvious that it may be difficult to meet up with our revenue targets, as we are projected in the budget. So, what are we faced with? Are we going to choose another option, but a very difficult option, or we go a borrowing.
“When we borrow this type, it certainly has implications. So, in the short term, there are very few options that are available on the table. But most economic solutions don’t come in the short-term. At best, they come in medium-term.
“And that is why we have continued to maintain and sustain that what will deliver Nigeria out of economic quagmire, not just now, but in the near future, is manufacturing.”
