As reactions continue to trail the Federal Government’s proposed 2025 Budget unveiled by President Bola Tinubu on Wednesday, analysts have expressed reservations about some of the key assumptions underlying the appropriation bill.
While some Nigerians believe that the budget, the highest in naira form so far, might alleviate poverty, some analysts view it as mere paperwork that might not have positive impacts on the lives of the people.
In their reaction to the budget, for instance, analysts at the Bismarck Rewane-led Financial Derivatives Company (FDC) Limited, said that the FG’s inflation target of 15 per cent, “sounds far-fetched.”
They stated that some of the assumptions in the budget are over optimistic.
On his part, Patrick Utomi, a Nigerian professor of political economy and management expert, said that the Nigerian budget is a joke, and that he has since stopped commenting on it.
This was as Mr. Gabriel Idakolo, a wealth management expert, said that effective implementation of the budget will be the key to achieving economic success.
Analysts at Bismarck Rewane-led Financial Derivatives Company (FDC) Limited said: “Some of the key assumptions underlying the 2025 budget are over optimistic. The inflation target of 15%, down from the current level of 34.6% sounds far-fetched. The benchmark price of Brent leaves no headroom for market swings. Furthermore, the reference to $40bn of gross external reserves could be misleading.”
The analysts said that while some of the major inflationary drivers, such as the prices of petrol and diesel as well as the value of the naira, are abating, the “Inflation target of 15% is too optimistic,” adding that they, “ expect inflation of around 25%”.
While responding to the skepticism over the 15 per cent inflation target in an interview on Arise Television on Thursday, Director General of the Budget Office of the Federation, Tanimu Yakubu, stressed that President Tinubu has clear strategies to achieve the target.
He contended that with ongoing in-country refining of petroleum products, prices will drop in 2025.
He also disclosed that there will be enhanced monitoring of projects even if it means the deployment of consultants to ensure that they are more cost-efficient to improve the implementation of next year’s budget.
“We used to spend as high as one-third of our foreign exchange earnings to import refined products. With Dangote Refinery coming on stream and small local refineries adding to the supply, we think this will substantially reduce the pressure on the naira,” Tanimu said.
He explained that the growing confidence in the Nigerian economy would lead to increased foreign investments in 2025, while the spending in agriculture was being raised to ensure that food inflation is tamed.
“We used to spend up to 30 per cent of our foreign exchange to import refined petroleum products. With the takeoff of the Dangote refinery, certainly we’ll spend a lot less. The successes that have been recorded in reducing the number of ungoverned spaces all over the country enabled farmers to return to work, and we expect a bumper harvest this year.
“Mr. President has also decided to spend N120 billion to flood the country, in particular public hospitals, with free drugs and also to provide medicines that are particularly for indigent patients, people with life-threatening diseases like tuberculosis, HIV and the rest of them, but are unable to afford the cost of such drugs.
“These are some of the factors that drive inflation. In particular, you also need to know that the Dangote and other refineries will not only be meeting the domestic supply gap, they are also going to be exporting refined products which will bring in additional export revenue,” he stated.
Utomi speaks
Patrick Utomi said that the Nigerian budget is a joke and that he has since stopped commenting on it. “I don’t comment on the Nigerian budget again. If you listen to my statements in the media, I said that I stopped commenting on the nation’s budget 20 years ago because our budget is always a joke,” he said.
Idakolo comments
Gabriel Idakolo said that the budget as presented by the President Bola Tinubu covered key critical sectors of the economy including security, manufacturing, agriculture, and oil and gas production.
Idakolo added that the drive for increased export of crude and agricultural products and reduced import of petroleum products and food items will be a step in the right direction to boost revenues accruing to the Federal government.
He added that he also expected that with increased budgetary allocation to education and focus on youth oriented policies, unemployment will reduce and more productivity will be achieved in the economy.
“Overall, the budgets assumptions of N1,500/1$ and crude production of 2.06 mpd are realistic based on the present strength of the Naira and improved crude production of about 1.8mpd presently being achieved.
“The effective implementation of the budget will be the key to achieving economic success in 2025. The government aims to reduce inflation to 15% with this budget, the major challenge we have had in the past is ineffective budget implementation and misappropriation of budgetary allocations.
“This budget can be a departure from the past only if concerted efforts are made at implementation, monitoring and proper allocation of resources.
“The challenges we face as a country cannot be overcome with one budget circle but with consistent planning and improvement on previous budgetary gains,” he said.
