The World Bank has described Nigeria’s Budget 2025 key assumptions, which forecast 2.1 million barrels per day (mbpd) of oil production at a price of $73 per barrel, as ambitious given the current production level of 1.6 mbpd and the international market price of $60 per barrel. This skepticism comes amid a backdrop of Nigeria’s ongoing economic reforms and high inflation rates, as outlined in the World Bank’s Nigeria Development Update presented in Abuja on Monday.
In a pointed response, the Federal Government defended its projections, asserting that they are grounded in the country’s economic potential. During the presentation, attended by prominent figures including the Ministers of Finance, Budget and National Planning, and the Governor of the Central Bank of Nigeria, Lead Economist Dr. Alex Sienaet emphasized the importance of realistic fiscal projections for sustainable growth.
The World Bank noted that for Nigeria to achieve its ambitious target of a $1 trillion economy by 2030, the growth rate must quintuple to exceed the current 3.8 percent. Despite the challenges posed by a rising cost of living, the Bank encouraged the government to maintain its momentum in implementing vital economic reforms.
Highlighting the ongoing economic developments, Dr. Sienaet praised the government’s removal of petrol subsidies and its liberalization of the foreign exchange market. However, he urged the government to ensure that the revenue gains from these reforms—estimated at 2.6 percent of GDP for 2024—are fully reinvested into the Federation Account. Concerns were raised regarding the transfer of funds post-subsidy removal and the need for full remittance to support sound fiscal management.
The World Bank warned that the 2025 budget’s ambitious revenue targets could lead to a larger fiscal deficit if not monitored closely. It underscored the necessity of achieving fiscal discipline to complement monetary policy, thereby managing inflation and ensuring sustainable capital spending.
To accelerate economic growth and create jobs, the World Bank proposed a four-point strategy emphasizing private sector leadership in collaboration with government initiatives. These recommendations included addressing infrastructure gaps, fostering market competition, enhancing access to finance, and improving policies that unlock the potential in vital economic sectors.
Federal Finance Minister Wale Edun echoed the importance of transparency in fiscal data and oil revenue management, emphasizing that sustained investment is crucial for productivity and job creation. He assured that a forensic audit of the Nigerian National Petroleum Corporation (NNPC) was underway to recover all due funds.
Minister of Budget and Economic Planning Abubakar Atiku Bagudu disagreed with the World Bank’s assessment of being overly ambitious, arguing that the projections are rooted in Nigeria’s capacity for growth, referencing past production levels. Central Bank Governor Yemi Cardoso highlighted the need for economic stability to foster growth, pointing to recent successes in moderating foreign exchange volatility.
Plateau State Governor Caleb Mutfwang defended state governments’ handling of increased revenues, indicating that rising security costs due to widespread insecurity are impacting the allocation of funds toward critical investments. He called for a deeper examination of the interplay between insecurity and macroeconomic policy.
As Nigeria navigates these challenging economic waters, the dialogue between the World Bank and government officials reveals a complex landscape, where aspirations for growth must be balanced with the realities of current conditions and strategic planning.