FG Adopts Innovative Financing to Close 2025 Budget Gap

The Federal Government has outlined plans to utilize innovative, market-driven strategies to tackle the projected N14 trillion budget shortfall for the 2025 fiscal year.

Minister of Budget and National Planning, Atiku Bagudu, revealed these measures during the 2025 KPMG Arise TV Budget News Day.

Bagudu stressed the administration’s commitment to fiscal responsibility, emphasizing that the Central Bank of Nigeria (CBN) would not exceed the legal limit of 5% of the prior year’s revenue for deficit financing. Instead, the focus will be on alternative avenues such as local bond issuances and structured financial instruments.

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“On the deficit, we are looking at N14 trillion. Given what we have seen in the innovative approach to financing, first, because you don’t have a Central Bank of Nigeria that will be going beyond the legal bit of 5%, we are looking at market solutions. We are going to the market in different ways using innovative financing techniques,” Bagudu explained.

Additionally, the minister highlighted the potential reduction in debt-servicing costs should economic conditions improve as anticipated in 2025. He reiterated the government’s dedication to increasing revenue through tax reforms, public-private partnerships, and targeted investments in productive sectors.

In February 2025, President Bola Tinubu signed into law a N54.99 trillion appropriation bill for the year, representing a significant increase compared to the 2024 budget of N27.5 trillion. Debt servicing alone accounts for N14.32 trillion of the new budget, raising concerns about funding for social and infrastructural development. Tinubu has also set a target to reduce the inflation rate from 34.6% to 15% by the end of 2025.