The World Bank has described Nigeria’s 2025 budget assumptions — oil production of 2.1 million barrels per day (mbpd) at $73 per barrel — as overly optimistic, citing current realities of 1.6mbpd output and $60pb market price. This caution was part of the Bank’s May 2025 Nigeria Development Update (NDU), presented Monday in Abuja.
While commending economic reforms undertaken by the Federal Government, the Bank warned that to hit the projected $1 trillion economy by 2030, Nigeria must accelerate its current 3.8% growth rate fivefold. It also stressed the need for continued reform implementation despite persistent inflation and a rising cost of living.
Strong Reforms, Rising Revenues
The World Bank acknowledged that policies such as petrol subsidy removal and foreign exchange market liberalization have significantly boosted government revenues. Federation revenue rose from ₦16.8 trillion in 2023 to ₦31.9 trillion in 2024, with states now receiving a larger share — ₦13.8 trillion versus the Federal Government’s ₦12.3 trillion.
However, it flagged that NNPC Limited has only remitted 50% of gains from the subsidy removal to the Federation, citing arrears. The Bank stressed that fully transferring these gains is “critical for sound fiscal management.”
Inflation, Growth, and External Position
Real GDP growth in Q4 2024 hit 4.6%, lifting full-year growth to 3.4%, the highest since 2014 (excluding the pandemic rebound). However, agriculture lagged at 1.2%, undermined by insecurity and high input costs. Growth is projected to slightly improve to 3.7% in 2025.
Inflation remains a key concern. Despite monetary tightening by the CBN, consumer price pressures persist, with average inflation projected at 22.1% in 2025. Still, the FX reforms have helped consolidate the naira exchange rate and attract foreign investment. The current account surplus surged 185% to $17.2 billion in 2024, while net external reserves rose to $23.1 billion, up from just $4 billion a year earlier.
Fiscal Discipline and Investment Needs
Nigeria’s fiscal deficit narrowed significantly from 5.4% of GDP in 2023 to 3.0% in 2024, aided by FX subsidy removal and better tax administration. Public debt rose to 53.2% of GDP, mainly due to FX revaluation, but debt service-to-revenue ratio improved, falling below 40%.
To sustain progress, the Bank urged cautious budget implementation, greater expenditure transparency, and increased investments in youth and infrastructure.
Government Reacts
Finance Minister Wale Edun affirmed that the economy has stabilized post-crisis and emphasized the need for transparency in oil revenue reporting, revealing that a forensic audit of NNPC Limited is underway.
Budget and Economic Planning Minister Atiku Bagudu rejected the claim that the budget assumptions were unrealistic, insisting they were based on Nigeria’s production potential and premium oil grades.
CBN Governor Yemi Cardoso highlighted efforts to stabilize the economy, noting that FX volatility has reduced from 4% to less than 0.5% year-on-year. He emphasized the importance of proactive risk management in sustaining economic gains.
Plateau State Governor Caleb Mutfwang defended increased state spending, citing rising security costs and reduced purchasing power, and called for the NDU to better account for insecurity’s macroeconomic impact.
