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“The budget is the skeleton of the state stripped of all misleading ideologies.” – Rudolf Goldscheid

On 12 May 2025, the World Bank presented the May 2025 edition of its Nigeria Development Update titled ‘Building Momentum for Inclusive Growth.’ While the general tone of the report itself was one of cautious optimism, Alex Sienaert, the Bank’s Lead Economist for Nigeria, used the opportunity of the presentation to challenge the assumptions underpinning Nigeria’s 2025 budget. He felt that moving from an average crude oil production level of about 1.6 million barrels per day (mbpd) to 2.1 mbpd in 2025 was very optimistic. He was right to be concerned, especially as data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shows that, so far in 2025, Nigeria’s daily average crude oil production in January was 1.53 mbpd, 1.45 mbpd in February, 1.40 mbpd in March, and 1.48 mbpd in April. Nigeria has struggled to meet even its OPEC quota of 1.5 mbpd over the last 5 years at least. Therefore, predicating the 2025 budget on an average crude oil production of 2.1 mbpd does, indeed, seem very optimistic.

Sienaert also questioned the assumptions that oil prices would be $75 per barrel this year; that the average exchange rate would be N1,400 to the dollar; and that inflation would be at 15%. The Minister of Budget and Economic Planning, Senator Abubakar Bagudu, disagreed that the assumptions were over-optimistic and even claimed that they were modest. His source of confidence was that although crude oil prices averaged $60 per barrel, Nigeria’s higher quality brent crude was averaging $73 per barrel. On the number of barrels to be produced per day, he hinged his bullishness on Nigeria’s record and capacity in the past. He was then quoted by Punch newspapers as having made the curious statement that “A budget should not be a reflection of our indulgencies. It should be a reflection of our potential.” At the time of writing on 13 May 2025, the NUPRC website is showing the price of Brent Light Crude as $65.63; the average exchange rate this year has been above N1,500 to the dollar; and the Central Bank of Nigeria data is showing headline inflation of 24% in March 2025.

Often in developing countries, budgets are prepared based on hopes, aspirations, and even sometimes ego, rather than reality. Here in Nigeria, in the not-too-distant past, some governors even made sure that their budget size was larger than that of neighbouring states that they felt they were bigger than. Every year, revenue typically lagged well behind the expenditure estimates. In reality, only the recurrent part of the budget, mainly salaries, tended to be cash backed. The other aspect of the recurrent budget, the overheads, which pay for maintenance and running costs, are never fully released. Apart from misappropriation, that is why the toilets in the secretariats smell and the electricity companies often cut off power supply to ministries. The capital expenditure part of the budget, which delivers things like infrastructure and technology, suffers the most. I have seen analyses that say that Nigeria typically funds less than 60% of its capital budget every year.

Why do governments announce unrealistic budgets? They do it to show citizens that they intend to improve their lots and give them a better life. Citizens typically applaud these large budgets that sometimes have exotic names like ‘Budget of Olimpotic Meristemasis’, in the belief that it would deliver so-called ‘dividends of democracy.’ Given the Goldschied quote at the start of this article that the budget is the skeleton of the state stripped of all misleading ideologies, civil society organisations assume, as they are entitled to, that if it was budgeted and appropriated as law, it can be taken as read that the money has been or will be spent. It is often not the case.

Over the last 10 years or so, a lot of effort went into reforming the budgeting approach at state and federal levels to ensure greater budget realism. Indeed, the Federal Government, using a World Bank loan to encourage fiscal transparency and accountability at subnational level, started to give cash grants of millions of dollars to state governments that can show more realistic budgeting. To its credit, the Nigerian Governors Forum has continued to demand budget realism from state governments even after the incentive grants to state governments ended in December 2023. Many state governments now have fairly realistic and predictable budgets.

Therefore, what may now seem like a return to the era of what could be termed ‘miracle budgeting’ at the federal level is of great concern. I have derived the term ‘miracle budgeting’ from the practice of a certain Apostle Johnson Suleiman who often asks his congregation to hold up their phones to receive “miracle alerts.” In an event in Atlanta, USA, in July 2021, as well as several other times afterwards, he claimed that angels would deposit money into the bank accounts of people holding their phones aloft. I would like to meet a beneficiary of such ‘miracle alert’ to ask them which bank Angel Gabriel uses and what his account number is.

The World Bank’s Alex Sienaert worried that unrealistic budgeting could renew the risk of illegal and inappropriate Ways and Means, like we had in the last administration. I am more worried about things that may be altogether even more sinister: the fuelling of corruption, the abuse of public office, and the deepening of poverty.

When available revenue deviates substantially from budgeted income, budget execution becomes unpredictable. The President and the Ministers of Finance and Budget and Economic Planning now have to prioritise what gets funded and what doesn’t. Things on a first-line charge, like the monies that go to states and local governments from the Consolidated Revenue Fund, allocations to the judiciary, and monies for debt servicing would automatically be honoured, even if you have to borrow to pay them. After these are paid, the prioritisation continues about what comes out of the federal government’s own funds. Usually, the President and those close to him would do this prioritisation at a broad level, often guided by presidential priorities. However, it should be clear to see how the prioritisation process can be used as a tool of control or political leverage by the President.

Once set out, the accepted priority areas still need to be deconstructed in terms of specific activities and projects. Therefore, you get ministers and chief executives of agencies and parastatals going to the Budget Office of the Federation and the Office of the Accountant General of the Federation to beg that their own projects be prioritised over those of others because the money in the pot is simply not enough. This opens the door for officers in both organisations to be induced with corrupt rents.

There are other consequences of a lack of budget realism. Usually, the provisions for human development issues like health, education, nutrition, and poverty alleviation suffer first. Even when capital projects like the construction of roads and bridges are prioritised, choices still have to be made about which roads are more important and to whom. Additionally, public servants often do not want to advertise tenders when they are not sure when the money would be available to pay for those projects. In 2015, the then-Minister of Works, Mike Onolemem, announced that the federal government had cut the budget of the ministry from the N100 billion that was initially appropriated to N11 billion. In 2018, Babatunde Fashola, the then-Minister of Works, announced that his ministry did not execute a single capital project in 2017!

Also, government finds it difficult to honour international commitments and investors lack confidence in government pronouncements and hold on to their monies. Because things like debt servicing must be prioritised at the expense of productive initiatives that may grow the economy, poverty worsens, and economic hardship grows. Also, short-termism sets in, and it is difficult to follow any sort of economic blueprint or development plan.

When governments budget with unrealistic revenue projections, it is akin to holding up a phone expecting a miracle alert after an angel would have deposited money into the treasury. While individuals could believe in miracle money if they wish, the state should not.

Joe Abah, PhD, is a development professional and a former Director-General of the Bureau of Public Service Reforms in the Nigerian Presidency.