E conomic experts have cautioned that the approval of the ₦54.99 trillion 2025 Appropriation Bill by the National Assembly may drive inflation higher, urging fiscal and monetary authorities to prepare for its potential impact.
The budget, which includes ₦14.32 trillion for debt servicing and ₦13.64 trillion for recurrent expenditure, was passed on Thursday, marking a significant increase from earlier proposals.
Speaking on the development, Chief Economist at SPM Professionals, Paul Alaje, warned that the expansionary nature of the budget could fuel inflationary pressures, especially if fully implemented.
"The government is aiming to reduce inflation to 15 percent, yet it plans to increase spending significantly. There are trade-offs in economics—more spending often leads to inflation. Additionally, financing this budget remains a challenge, as revenue sources may not be sufficient," Alaje stated.
He further noted that while efforts have been made to reduce the debt service-to-revenue ratio from 98 percent to 67 percent, the new budget could push borrowing levels higher.
Similarly, Dr. Joseph Ogebe, Head of Research at the Nigerian Economic Summit Group, emphasized the need for private sector collaboration to ensure effective budget implementation.
"This is the largest budget in Nigeria's history. While increased capital allocation signals a commitment to infrastructure development, successful execution requires private sector involvement. Addressing fiscal efficiency, supporting social interventions, and developing critical infrastructure will be key to ensuring economic growth," Ogebe explained.
As Nigeria navigates economic uncertainties, experts stress the importance of balancing spending with fiscal responsibility to mitigate inflation risks and sustain long-term economic stability.
Agboola Aluko, Reporting for GLiDE NEWS
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