FEC approves N47.9trn budget for 2025

…To borrow $2.2bn amid N8.25trn debt service
…Sets up N250bn mortgage finance at 12% for 20 years

The Federal Executive Council (FEC), on Thursday, approved a proposed budget of N47.9 trillion for the 2025 fiscal year.

This represents a 35 percent increase in the 2024 total budget, which stood at N35.5 trillion. The 2025 budget is an indication that the federal government plans to run an expansionary budget to lift millions of Nigerians out of poverty.

Atiku Bagudu, minister of budget and economic planning, disclosed this while briefing State House journalists after the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu on Thursday.

Bagudu said this was part of the Medium Term Expenditures Framework (MTEF) for 2025 to 2027 and in line with the Fiscal Responsibility Act (FRA) of 2007.

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He also revealed that FEC granted approval for the MTEF to be submitted to the National Assembly within the next few days as required by the 2007 FRA.

The framework projects a gross domestic product (GDP) growth rate of 4.6 percent, crude oil price of $75 per barrel, exchange rate of N1400/dollar and oil production of 2.06 million barrels per day.

Recall that the federal government had, in the 2024 budget of ‘Renewed Hope,’ presented a total budget of N27.5 trillion (equivalent to $36.7 billion), with a projected revenue of N18.32 trillion ($24.4 billion) and a deficit of N9.18 trillion ($12.2 billion). The total budget was later increased to N35.5 trillion.

To achieve the projected revenue, the federal government had also estimated oil revenue at N7.68 trillion, with government-owned enterprises tasked with the responsibility of contributing N4.07 trillion.

But a breakdown of the proposed 2025 budget shows a non-debt recurrent expenditure of N9.92 trillion, a capital expenditure of N7.72 trillion (exclusive of transfers), debt service of N8.25 trillion, a statutory transfer of N1.37 trillion, and a sinking fund of N243.66 billion.

Edun speaks on borrowing plans

Wale Edun, minister of finance and coordinating minister of the economy, revealed that the council also gave a nod to a fresh external borrowing of $2.2 billion, made up of $1.7 billion and SUKUK financing of $500 million.

Edun said the approval is to strengthen the country’s finances and enhance economic reforms.

The minister said he submitted two memos, including those on external borrowing plans, which when finally approved by the National Assembly will grant Nigeria access to the international capital market for some combination of the Euro bond and SUKUK financing.

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“The first one is to complete the borrowing programme of the federal government in terms of the external borrowing, with the approval of the $2.2 billion financing programme made up of access to the international capital market for some combination of the Euro bond offer and the Sukuk bond offer – perhaps a Euro bond of about $1.7 billion and Sukuk financing of another $500 million. The actual makeup of the financing, which will be done as soon as the National Assembly, has considered.”

Edun stated that Nigeria’s economy has shown resilience in the financial markets, capacity and increased complexity through domestic issuance of dollar bonds which, according to him, attracted local investors.

“This being able to access the international capital market is also a sign of the acceptance and the support for the macroeconomic programme of Mr President and indeed his entire administration.

“So, it is on the basis and the strength of the progress to date that we do have a window to access the international capital market for up to $2.2 billion in financing. That part of the Nigerian 2024 Appropriation Act has amended.”

He disclosed that council also approved the creation of a N250 billion real estate investment fund, which aims to tackle Nigeria’s 22 million housing deficit and provide long-term, affordable mortgage financing for Nigerians.

Edun assured that the initiative will provide Nigerians with the opportunity to secure mortgages at interest rates of between 10 percent and 12, which is significantly lower than the current market rates which can exceed 30 percent, with tenors that could extend up to 20 years or more.

“Approval has been granted for the Ministry of Finance Incorporated (MOFI) real estate investment fund. This fund will serve as the basis for the revival of long-term mortgage financing in the Nigerian economy.

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“The MOFI Real Estate Investment Fund will initially amount to N250 billion and will provide low-cost, long-term mortgages to Nigerians who wish to acquire homes. It will help address part of the 22 million housing deficit.

“Of course, it will create jobs, stimulate economic growth, and pave the way for other private sector investors to participate in the housing construction industry, with significant benefits for the broader economy.

“The concept is long-term. Investors will have the opportunity to earn market rates of interest and returns on investment, blended with seed funding of N150 billion.”