[BREAKING] 2025 Budget: Debt servicing overshadows other critical sectors — CPPE

The Managing Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has raised concerns over the 2025 proposed federal budget, highlighting its heavy emphasis on debt servicing at the expense of vital sectors.

He also criticised the 35 percent interest rate on borrowing, calling it detrimental to the country’s economy and describing it as “suicidal,” with potentially harmful effects on Nigeria’s financial stability.

Speaking at a webinar hosted by Nigerian NewsDirect Newspaper, themed ‘Nigeria’s Economic Outlook 2025: Trends, Challenges, and Opportunities for Growth’, Yusuf pointed out that a substantial portion of the proposed budget is earmarked for debt servicing, leaving key sectors such as healthcare, education, infrastructure, and security severely underfunded.

“The 2025 budget clearly prioritises debt servicing. This is a cause for concern, as sectors critical to national development are barely receiving the finances allocated to them,” Yusuf said.

Supporting Yusuf’s concerns, a representative from the Nigeria Immigration Service noted that only 5 percent of the funds allocated to their sector had been disbursed, highlighting the financial neglect faced by critical areas of government.

In December 2024, NewsDirect reported that President Bola Ahmed Tinubu presented the proposed N49.7 trillion budget for 2025 to the National Assembly. Dubbed the “Budget of Restoration: Securing Peace and Rebuilding Prosperity,” the budget is designed around ambitious revenue targets and national priorities.

The proposed total budget of N49.7 trillion includes projected revenue of N34.82 trillion, a deficit of N13.08 trillion (3.89 percent of GDP), and debt servicing at N15.81 trillion. Other allocations include security (N4.91 trillion), infrastructure (N4.06 trillion), education (N3.52 trillion), and healthcare (N2.48 trillion).

The budget is based on several economic assumptions, including daily crude oil production of 2.06 million barrels, an exchange rate of N1,500 to the dollar, and a target inflation decline from 34.6 percent to 15 percent.

Yusuf emphasised the imbalance in resource allocation, stressing that the dominance of debt servicing in the budget undermines other critical sectors essential for national development. He called for a strategic review of fiscal policies to prioritise human capital development, infrastructure, and security.

In defence of the budget, President Tinubu stated, “This is an ambitious but necessary budget to secure our future,” urging Nigerians to unite in support of the nation’s renewal.

As the 2025 budget undergoes legislative scrutiny, analysts and citizens alike are closely monitoring how these allocations and projections will affect living conditions and economic growth.

The debate over the budget’s priorities underscores the need for a balance between managing debt obligations and addressing the country’s developmental needs.

Yusuf further warned that the 35 percent interest rate on borrowing could stifle economic growth.

“The cost of borrowing is too high. It will be difficult to repay such debt, and this will put immense pressure on the economy,” he said.

“It could cripple business if we are not careful. The government must play a role in regulating the market economy. It is suicidal for anyone to take out a loan at 35 percent interest in the current economic climate.”

He advocated for alternative financing options, suggesting that the government could strengthen its programmes through equity financing, rather than relying solely on debt.