World Bank Flags Nigeria’s 2025 Budget Assumptions as Overly Ambitious Amid Oil Production Shortfalls

The World Bank has raised significant concerns regarding Nigeria's 2025 federal budget, labeling the government's oil production and price assumptions as overly optimistic given the current economic realities.

The budget, which aims to allocate ₦49.74 trillion, is heavily reliant on oil revenues, with projections based on an oil price of $75 per barrel and a production target of 2.06 million barrels per day (bpd). However, recent data indicates that actual production levels are falling short of these targets, casting doubt on the feasibility of the budget's revenue projections.

The Nigerian government has set an ambitious oil production target of 2.06 million bpd for 2025. However, official data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that crude oil output stood at approximately 1.737 million bpd in January 2025, well below the targeted figure. This shortfall is attributed to various factors, including oil theft, pipeline vandalism, and aging infrastructure. Industry experts have expressed skepticism about the government's ability to meet the production target, citing these persistent challenges.

The budget's reliance on an oil price benchmark of $75 per barrel also faces scrutiny. Global oil prices have experienced volatility, with Brent crude prices recently declining to around $66 per barrel, well below the budget's assumption. This price drop has raised concerns about the sustainability of oil revenues and the potential impact on the budget's financial framework.

Despite these concerns, the Nigerian government maintains that the 2025 budget's assumptions are realistic and achievable. Officials argue that ongoing efforts to combat oil theft and improve infrastructure will lead to increased production levels. Additionally, they point to recent reforms in the oil sector aimed at boosting efficiency and attracting investment. The government remains optimistic that these measures will enable the country to meet its production targets and stabilize oil revenues.

The World Bank's assessment highlights broader economic challenges facing Nigeria, including high inflation rates and currency volatility. The bank projects a 3.6% overall growth rate for 2025, contingent on the successful implementation of fiscal reforms and stabilization measures. However, the current economic climate poses risks to the achievement of these projections, underscoring the need for prudent fiscal management and diversification of revenue sources.

As Nigeria navigates the complexities of its 2025 budget, the World Bank's concerns serve as a critical reminder of the uncertainties inherent in oil-dependent economies. The government's ability to address production shortfalls, stabilize oil prices, and implement effective reforms will be pivotal in determining the success of the 2025 budget and the broader economic outlook for the country.