Nigeria’s Fiscal Deficit Hits N7.05 Trillion Amid Economic Recovery Signs
Economics and financial analysts have raised serious concerns over Nigeria’s fiscal deficit which surged to N7.05 trillion by the end of the third quarter of 2024.
President Bola Tinubu on Wednesday revealed this during the presentation of the N47.96 trillion 2025 budget tagged Budget of Restoration to a joint session of the National Assembly.
He also announced an ambitious revenue target of N34.8 trillion for 2025, alongside a projected economic growth rate of 4.6 per cent.
Economists and financial experts have expressed concern over the widening fiscal deficit and its implications for Nigeria’s debt sustainability and economic stability:
“A deficit of this magnitude raises questions about adherence to the Fiscal Responsibility Act (FRA), which caps the fiscal deficit at 3 percent of GDP. At 3.87 percent of projected GDP for 2025, this level of borrowing could crowd out private sector investments and strain debt servicing,” said Dr. Ayo Olukotun, a fiscal policy analyst.
Despite the fiscal challenges, Nigeria’s economy showed signs of recovery in 2024, expanding by 3.46 per cent in the third quarter of 2024, up from 2.54 per cent in the third quarter of 2023, signaling a rebound driven by improved agricultural output and industrial activity.
Nigeria’s foreign reserves also stand at $42 billion providing a buffer against external shocks. Exports outpaced imports, resulting in a trade surplus of N5.8 trillion, according to the National Bureau of Statistics.
