Avoiding Nigeria's Descent Into Fiscal Trap | 2025 Budget By Odiawa Ai

As we look ahead to the 2025 budget, it is imperative that the Nigerian government carefully reassess its strategies to avoid a troubling descent into a fiscal trap. The initial draft of the 2025-2027 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) is fraught with assumptions that could inadvertently exacerbate the already struggling economy. While we are faced with significant challenges, the silver lining is that it is not too late to reverse this decline. A pragmatic approach to federal appropriation is essential for steering Nigeria away from economic instability.

The current fiscal landscape is characterized by a widening deficit and unchecked debt accumulation—issues that have become alarming features of Nigeria's economic environment. As civil society organizations and other critical stakeholders raise their voices, calling for fiscal caution and sustainability, the government has yet to respond in a meaningful way. This lack of action raises critical questions about the Bola Ahmed Tinubu administration's commitment to breaking the cycle of fiscal irresponsibility and demonstrating true leadership in fiscal consolidation.

Budgeting is not merely a bureaucratic exercise; it is a serious endeavor that dictates the spending priorities of a nation while identifying reliable funding sources. Standard practice worldwide involves setting conservative parameters around revenue streams to ensure that fiscal policies are grounded in reality. Unfortunately, the Nigerian government has a history of overstating its financial capacities, a trend that began during the administration of President Muhammadu Buhari. Disturbingly, the current administration appears poised to continue this legacy of flawed assumptions, which has resulted in an average federal budget performance of only 70% in recent years.

To avoid falling deeper into a fiscal abyss, the government must take decisive steps to address these critical issues. First and foremost, there is an urgent need to confront the escalating deficit head-on. This requires a comprehensive review of expenditure priorities, ensuring that funds are allocated to areas that will stimulate economic growth and improve the quality of life for Nigerians. Transparency and accountability in how public funds are utilized will be crucial in regaining the trust of the populace and international investors alike.

Moreover, the government must establish clear and realistic revenue projections, rooted in empirical data rather than optimistic forecasts. By adopting a more conservative approach to revenue expectations, the administration can create a budget that is not only achievable but also sustainable. This means diversifying revenue sources, enhancing tax collection mechanisms, and fostering an environment conducive to investment and economic activity.

Fiscal discipline must become a hallmark of the Tinubu administration. It is time for the government to demonstrate its readiness to break the trend of fiscal recklessness that has plagued Nigeria for too long. By prioritizing fiscal responsibility, the administration can lay the groundwork for a more stable economic future, one that provides opportunities for all Nigerians.

The 2025 budget presents a critical opportunity for the Nigerian government to chart a new course for fiscal management. By reassessing its assumptions, confronting the deficit, and committing to sustainable practices, the administration can avoid the fiscal trap that threatens to engulf the nation.