The Lagos Chamber of Commerce and Industry has said the key parameters and assumptions on which the 2025 budget is being proposed “appears to be too optimistic” in the face of current realities as recorded in the economic and social indicators.
Following this, LCCI said in the face of current realities, governments at all levels should be more proactive in respect of nature-induced casualties, among other factors.
These were contained in a press release signed by the Chamber’s Director General, Dr Chinyere Almona, on Monday.
Almona stated that the Chamber was particular about the assumption of an exchange rate at N1,400, positing that the benchmark is too fragile to work with against the current average of above N1600 to a Dollar in both the official and parallel markets.
The Director General said: “Assuming an inflation rate at 15.8 percent does not reflect the unabating factors pushing up both the headline and food inflation.
“With inflation rising to 33.88 percent as of October 2024, it is unrealistic to assume a steep 51 percent crash within a year. Since the current challenging economic conditions are mostly fueled by the inflation rate and the exchange rate, we advise the government to reconsider the apparently over-ambitious assumptions for the 2025 federal budget.
“Beyond the assumptions and projections, the creation of an enabling environment for the private sector to thrive, and the clarity of policy direction in the economy are critical to achieving the projected growth rate of our Gross Domestic Product (GDP) in 2025”.
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Other factors LCCI required focus include: climate change impacts, and damages caused by human activities, adding that in recent months, the country has recorded massive destruction of lives and properties due to Climate-related factors.
“We therefore expect the legislative arms at all levels of government to appropriate more funds to tackle climate change adaptation and mitigation nationwide” Almona restated.
LCCI disclosed that debt services are proposed to increase by 91.2% to N15.38 trillion, which is equivalent to 32.1% of the total budget, maintaining that this appears to be unsustainable.
Almona lamented that the situation is further worsened with the projected deficit at N13.08 trillion and new borrowings of N9.22 trillion.
The release reads in part: “With Federal Government debt already at about N134 trillion as of June 2024, inflation reaching a new high of 33.88 percent as of October, and businesses burdened with a high Monetary Policy Rate at 27.25 percent, the Federal Government has a narrow bridge to navigate choices of policy options.
“We urge the Central Bank of Nigeria to sustain its Ways and Means Advances to the Federal Government at a five percent limit for the fiscal years 2024-2025.
“The Federal Government should sustain fiscal discipline by complying with the Fiscal Responsibility Act in budget management and borrowing.
LCCI warned that non-oil revenues, such as taxes, customs duties, and surpluses from government agencies, are all subject to volatility in the economy.
Consequently, the Chamber affirmed that current economic downturns, tense business environments, ongoing debates on tax policies, and shifts in consumer behaviour can impact non-oil revenue performance.
However, Almona noted that the proposed 2025 budget aggregates are inherently sensitive to current macroeconomic conditions, as they directly impact revenue generation, expenditure, and overall fiscal performance.
The Eagleonline reports that approved 2025 – 2027 MTEF proposed that the Federal Government will spend N47.9 trillion to run the economy in 2025.
This represents an increase of 36.64% in government expenditure compared to N35.06 trillion in 2024. In nominal terms, the budget is the highest in the history of the country in Naira denomination.
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