The recent adjustment in minimum wage to N70, 000 is expected to lead to a 60 percent increase in the federal government’s personnel and pension cost by 2025.
This will also affect the employee and employer contributions to pension and National Health Insurance Scheme (NHIS).
This is according to the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) document for 2025-2027.
According to the document, the N9.64 trillion (including N1.02 trillion for GOEs) provided for personnel and pension costs is an increase of N3.56 trillion over the 2024 provision and is mainly due to implementing the new minimum wage and its consequential adjustment.
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With the increased new minimum wage, pension obligation, other consequential adjustments, and increased debt costs, the budget deficit is projected to be N13.08 trillion in 2025, from N9.18 trillion estimated for 2024. This represents about 38 percent of total FGN revenues and 3.87 percent of the estimated GDP.
To fund this deficit and other expenditures in the budget, the government intends to borrow N9.22 trillion in 2025. Of this total, domestic borrowing is pegged at N7.37 trillion, which is 80 per cent of the borrowing projection for the year, while foreign borrowing will make up N1.84 trillion.
However, the document maintains that the Tinubu-led administration aims to lower the deficit levels to the threshold stipulated in the FRA 2025 within the medium term. The deficit will largely be financed by domestic borrowings, considering the narrow window for external financing.
The aggregate expenditures for the 2025 budget is estimated at N47.90 trillion, this includes the government-owned enterprises’ expenditures of N2.73 trillion and grants/donor-funded projects of N711.11 billion. The proposed 2025 Budget represents 36.6 percent (or about N12.85 trillion) higher than the 2024 FGN aggregate expenditure estimate of N35.06 trillion.
”The 2025 expenditure estimate includes statutory transfers of N4.26 trillion (this includes provisions for the newly established South East Development Commission, South West
Development Commission, and North West Development Commission), debt expenditure of N15.81 trillion (including N430.27 billion for the Sinking Fund for retiring maturing bonds
issued to local contractors/creditors), and non-debt recurrent expenditure of N14.21 trillion.
”N9.64 trillion (including N1.02 trillion for GOEs) is provided for personnel and pension costs. This is an increase of N3.56 trillion or 58.7 percent over the 2024 provision and is mainly due to implementation of the new minimum wage and its consequential adjustments.
”In line with its commitment to improving primary healthcare, N282.65 billion is made as a first-line deduction for the Basic Health Care Provision Fund (BHCPF) statutory transfer. Also, N231.78 billion has been set aside in the service-wide votes for GAVI/Routine Immunisation.”
The aggregate amount estimated for capital expenditure in the 2025 budget is N16.48 trillion, representing 34.4 percent of total expenditure. This provision is higher than the capital provision of the 2024 Amended Budget by 11.2 percent. The 2025 capital provision comprises N6.04 trillion for MDAs, N1.19 trillion for capital supplementation, N2.86 trillion for capital component of statutory transfers, N7 billion for Family Home Fund, N820.91 billion capital budget of GOEs, N711.11 billion for donor/grant funded expenditures and N3.55 trillion funded by project-tied multilateral/bilateral loans.
Other provisions, including TETFUND capital and transfer to the National Social Investment Authority (NSIA), amount to N1.30 trillion.
”In line with this Administration’s drive to stimulate economic activities in targeted sectors, create jobs, improve critical infrastructure under the Renewed Hope Infrastructure Development Fund, the Federal Government will provide sovereign guarantees for long-term financing of up to N3trillion for the recapitalization of the Bank of Agriculture (BOA), Federal Mortgage Bank of Nigeria (FMBN), InfraCorp, Ministry of Finance Incorporated (MOFI) and NEXIMBANK through the issuance of a long-term bond.
On the revenue side, the revenue is projected at N34.82 trillion (N8.95 trillion or 34.6 percent more than the
2024 Budget), this is made of N19.60 billion (56.3 percent) projected from oil and N15.22 trillion to be earned from non-oil sources.
Read also: The payment of minimum wage in Nigeria
The FGN share of non-oil tax revenues is projected at N5.71 trillion compared to N3.52 trillion in 2024, while its share of minerals and mining revenues is N15.49 billion in 2025 from N4.56 billion in 2024. The projection for Independent revenue is projected at N3.47 trillion, up from N2.69 trillion, while the projection for Grants and Donor funded projects is N711.11 billion.
The 2025 projections recognise dividends from the Bank of Industry, Development Bank of Nigeria, Galaxy Backbone, and NLNG, bringing the projection to N686.44 billion, 91.8 percent higher than 2024 estimates. The projected sum of other revenues, including FGN’s share of Oil Price
Royalty, Education Tax, Electronic Money Transfer Levy, and Drawdowns from Special Accounts, is N1.78 trillion.
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