Federal Govt Builds Stronger Economic Fundamentals Despite Revenue Shortfall

Despite a significant revenue shortfall in the 2025 fiscal year, Nigeria’s economy has recorded notable improvements across key macroeconomic indicators, signalling a gradual but steady recovery driven by policy reforms and improved fiscal and monetary coordination.

Inflation, which remained in double digits for most of the past 35 years and peaked at 34.6 per cent in November 2024, declined sharply to 14.45 per cent by November 2025, while foreign reserves rose to about $46 billion, enough to cover over 10 months of imports, with the naira maintaining relative stability across markets.

Foreign exchange inflows also strengthened, reaching $20.98 billion in the first 10 months of 2025, representing a 70 per cent increase over total inflows recorded in 2024, a development analysts attribute to renewed investor confidence and improved macroeconomic management.

In line with transparency commitments, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed to federal lawmakers that the government recorded a major revenue shortfall in 2025, achieving N10.7 trillion out of a projected N40.8 trillion, resulting in a gap of about N30 trillion.

He further outlined the 2026 budget framework approved by the Senate, including projected aggregate revenue of N34.33 trillion, expenditure of N54.46 trillion, fiscal deficit of N20.13 trillion, borrowings of N17.88 trillion, and key macro assumptions such as an oil benchmark of $60 per barrel, crude production of 1.84 million barrels per day and GDP growth of 4.68 per cent.

“I think the economic managers have made the best use of the revenue for the year by controlling spending and adjusting early to the likelihood of revenue shortfalls,” said Lagos-based financial analyst, Michael Nwadike, noting that prudent expenditure management helped stabilise the economy.

“That balancing act strengthened the economic fundamentals, as reflected in moderating inflation, stronger foreign reserve accretion and exchange rate stability, despite the revenue gap,” he added.

Also speaking on Nigeria’s outlook, the Director-General of the West African Institute for Financial and Economic Management (WAIFEM), Dr. Baba Musa, said Nigeria’s economy in 2025 reflects resilience and cautious optimism, with the IMF projecting GDP growth of 3.9 per cent in 2025 and further acceleration to 4.2 per cent in 2026.

Musa stressed that sustaining the recovery would require policy consistency, deeper structural reforms and ensuring that growth translates into jobs, higher incomes and improved welfare, while the Central Bank of Nigeria Governor, Olayemi Cardoso, reaffirmed that disciplined reforms have shifted the economy from crisis management to a path of sustainable recovery anchored on price stability and restored confidence.