Overly Ambitious Revenue Assumptions of Nigeria’s 2025 Budget Must be Monitored – World Bank

The World Bank Nigeria Development Update NDU, May 2025, continuously hammers on the current FGN budget. It said that the ambitious macroeconomic assumptions and revenue forecasts have the potential to widen the deficit if not carefully managed.

The report provides suggestions and crucial information that could be useful in improving economic development in Nigeria.

The largely positive also articulates that economic activity is expected to grow moderately in the medium term, driven by the services sector.

Improving Nigeria’s Fiscal Position in 2025

The FG established a Fiscal Data Coordination Framework, a structure that ensures accurate, consistent, and reliable fiscal data is collected, processed, and reported across various government agencies in March 202. The World Bank said that the establishment is a step in the right direction.

Based on the NDU, the fiscal outlook remains positive. Nigeria’s overall fiscal position improved significantly in 2024, with the fiscal deficit dropping from 5.4% to 3.0% of GDP, thanks to a sharp increase in revenues, from ₦16.8 trillion in 2023 to ₦31.9 trillion in 2024.

This boost was driven by the removal of the FX subsidy, better tax administration, and revenue remittance reforms.

Despite a rise in public debt to 53.2% of GDP, Nigeria’s debt service-to-revenue ratio improved markedly, from 100% in 2022 to below 40% in 2024, reflecting the strong revenue performance.

Most recent advances which have the power to affect the fiscal outlook must be maintained for a more improved position. The NDU specified that a full transfer of subsidy savings to the Federation by NNPCL needs to be fully resolved.

Also, the fiscal outlook hinges on a realistic 2025 budget implementation and improved spending efficiency and transparency.

The World Bank has suggested a reform that will allow for the transparent accounting of oil revenues. It said that comprehensive and ambitious reforms have substantially accelerated investments and growth across countries.

Some of the several methods include publishing reconciled monthly fiscal reports and quarterly budget implementation reports on time.