- Pegs oil price benchmark at $75 per barrel, exchange rate at N1, 400/$1
- Approves $2.2bn borrowing plan to support economic reforms
The Federal Government has approved the Medium Term Expenditure Framework for 2025-2027 and the Fiscal Strategy Paper.
According to the MTEF, the proposed budget size stands at N47.9trn, with new borrowings of N9.22trn.
The Minister of Budget and Economic Planning, Abubakar Bagudu, disclosed the details to State House correspondents after this week’s Federal Executive Council meeting at the Aso Rock Villa, Abuja.
Bagudu said, “The Federal Executive Council approved a memorandum by the Ministry of Budget and Economic Planning, presented by the Director General of the Budget Office, Tanimu Yakubu, on the Medium Term Expenditure Framework and Fiscal Strategy Paper for 2025-2027.”
He noted that the Council will transmit the framework to the National Assembly on Friday, November 15, or Monday, November 18.
The Minister outlined the parameters, including “an oil price benchmark of $75 per barrel for 2025, oil production of 2.06 million barrels per day, an exchange rate of N1400 to $1, and a GDP growth of 4.6 per cent.”
“For 2025, the Federal Government’s budget estimate for aggregate expenditure is N47trn, including a borrowing of N13.8trn, which is 3.87 per cent of the estimated GDP.
“This includes projections, with, for the first time, provisions for contributions to the development commissions that have been approved by the National Assembly.”
He added, “The budget size approved for presentation to the National Assembly in the MTEF is N47.9trn, with new borrowings of N9.22trn to finance the budget deficit in 2025. We aim to sustain the commendable market deregulation of petroleum prices and the exchange rate, compel the Nigerian National Petroleum Corporation Limited to significantly lower its oil and gas production costs, and potentially amend relevant sections of the Petroleum Industry Act 2021 to address key risks to the Federation.”
Bagudu further noted that the MTEF included a review of the 2024 budget implementation, highlighting promising progress in revenue collection and expenditure management.
“Despite some lags in prorated targets, the overall trajectory shows that fiscal efforts are on track, with key non-oil streams performing better than anticipated,” said Bagudu.
FEC approves $2.2bn borrowing plan to support economic reforms
The Federal Executive Council has also approved a $2.2 billion external borrowing plan to strengthen the country’s finances and support economic reforms.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, also spoke to journalists at the end of the FEC meeting on Thursday, presided over by President Bola Tinubu.
The Minister said the financing package will be raised through a combination of eurobonds and sukuk.
He said approximately $1.7 billion is expected from the Eurobond offer and $500 million from the sukuk financing.
The Minister disclosed that the borrowing would happen this fiscal year, stressing that the ultimate funding arrangement would be decided by market conditions and the transaction adviser’s counsel.
“The first objective is to complete the Federal Government’s external borrowing programme with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds —approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing.
“The actual composition of the financing will be finalised once the national assembly has considered and approved the borrowing plan.
“After the external borrowing approval is granted, the funds will be raised as soon as possible within the year.
“The exact combination of instruments will depend on the advice of transaction advisers and market conditions when we decide to enter the market.
“Earlier in the year, we demonstrated the resilience of the Nigerian financial markets and their capacity to handle more complex and sophisticated offerings, such as the domestic issuance of dollar bonds that attracted investors from both Nigeria and abroad,” he said.
Edun said the success of the domestic dollar bond demonstrates the Nigerian financial market’s tenacity.
He said the most recent overseas borrowing was “made possible by the government’s economic agenda, which includes market-based pricing for important economic variables like foreign exchange and petroleum goods.”
The Minister said the council also approved the establishment of a N250 billion real estate investment fund with the goal of addressing Nigeria’s housing deficit.
“Approval has been granted for the Ministry of Finance Incorporated (MOFI) real estate investment fund.
“This fund will serve as the basis for the revival of long-term mortgage financing in the Nigerian economy.
“The MOFI real estate investment fund will initially amount to N250 billion and will provide low-cost, long-term mortgages to Nigerians who wish to acquire homes. It will help address part of the 22 million-unit housing deficit.
“Of course, it will create jobs, stimulate economic growth, and pave the way for other private sector investors to participate in the housing construction industry, with significant benefits for the broader economy.
“The concept is long-term. Investors will have the opportunity to earn market rates of interest and returns on investment, blended with seed funding of N150 billion,” he explained.
Edun said the initiative will provide Nigerians with the opportunity to secure mortgages at interest rates significantly lower than the current market rates, which can exceed 30 percent, with tenures that could extend up to 20 years or more.
No hope in Renewed Hope Agenda – Onyekpere
However, the Federal Government’s proposed N47.9 trillion budget for 2025 has been described as holding no hope for Nigerians.
The Lead Director of Centre for Social Justice, Eze Onyekpere, in his reaction to the announcement of the approval of the medium-term expenditure framework 2025-2027 by the Federal Executive Council said though it is too early to comment as the details are not yet made public, the N47.9 trillion is approximately N48 trillion which is equivalent to $28.2 billion at an exchange rate of N1, 700/$.
“Nothing to cheer about,” he said.
“Check the budget of peers like South Africa and Egypt and you will know we are joking in the name of budgeting. No hope in the renewed hope after putting Nigerians through unprecedented misery,” Onyekpere said.
Nigerians had expressed worry over the delay in the submission of the MTEF 2025-2027 to the National Assembly few weeks to the end of the year, a situation they fear may also delay the presentation of the 2025 budget to the National Assembly and affect the quality of debate on the budget.
The Fiscal Responsibility Act mandates the Minister of Budget and Economic Planning to, before the end of the second quarter of each financial year, present the Medium-Term Expenditure Framework to the Federal Executive Council for consideration and endorsement.
Thereafter, the MTEF as endorsed by the FEC shall take effect upon approval by a resolution of each House of the National Assembly.
If that provision was observed, the MTEF 2025-2027 should have been endorsed by the Federal Executive Council by the end of June 2024 and should have been presented to the National Assembly in August 2024.
A Professor of Accounting and Financial Development, Lead City University, Ibadan, Professor Godwin Oyedokun, said the late approval of the MTEF for 2025-2027 by the Federal Executive Council is a cause for concern for several reasons because, according to him, it compromised the budgetary process.
“The late approval significantly undermines the quality of the budgetary process. It limits the time available for thorough scrutiny, analysis, and public input,” he said.
He said the Lawmakers may be forced to rush through the budget approval process, increasing the risk of errors and omissions.
However, he said it is important not to sacrifice quality scrutiny on the altar of meeting deadlines.
According to him, “Even if the budget proposal came late, lawmakers should conduct a thorough review of the budget proposal, paying close attention to revenue projections, expenditure allocations, and debt sustainability.
“They should engage with civil society organizations, experts, and the public to gather feedback and ensure that the budget aligns with the needs of the people. And of course they should ensure that the budget adequately funds critical sectors such as education, healthcare, and infrastructure.”
