Abuja, Nigeria
December 3, 2024
The Nigerian Senate has approved the 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) presented by the Chairman of the Senate Committee on Finance, Senator Sani Musa, during a plenary session.
The framework outlines the government’s three-year fiscal strategy, with key projections and expenditure plans that will serve as the foundation for the 2025 national budget.
Key Highlights of the Approved MTEF/FSP
- Total Expenditure: A spending plan of ₦47.9 trillion for 2025.
- Borrowing Plan: A new borrowing proposal of ₦9.22 trillion, encompassing both domestic and foreign sources.
- Exchange Rate: An average exchange rate assumption of ₦1,400 to the US dollar.
- Oil Price Benchmark:
- $75 per barrel in 2025
- $76.2 per barrel in 2026
- $75.3 per barrel in 2027
- Daily Oil Production:
- 2.06 million barrels in 2025
- 2.10 million barrels in 2026
- 2.35 million barrels in 2027
Concerns Over Rising Debt
The framework highlights Nigeria’s growing reliance on borrowing to fund its fiscal activities. Projections indicate the Central Bank of Nigeria’s (CBN) credit to the government will grow significantly over the three-year period:
- 2024: ₦38.7 trillion
- 2025: ₦43.7 trillion (+₦5 trillion)
- 2026: ₦48.8 trillion (+₦5.2 trillion)
- 2027: ₦53.6 trillion
As of September 2024, the CBN’s credit to the government had already surpassed the projected figure for the year, standing at ₦42 trillion, exceeding the anticipated ₦38 trillion.
CBN credit—advances and overdrafts provided to bridge government revenue shortfalls—has been a source of concern for analysts and stakeholders, who worry about the sustainability of Nigeria’s growing debt profile.
Implications
The approval of the MTEF/FSP sets the stage for the preparation of the 2025 national budget. However, the government’s increasing reliance on loans to finance its fiscal operations raises critical questions about Nigeria’s economic strategy and long-term financial stability.
The Senate’s decision underscores the urgency of implementing measures to diversify revenue streams, reduce dependence on borrowing, and stimulate sustainable economic growth.