The Nigerian government may face increased fiscal pressures in 2025 due to the rising debt service costs, increased government expenditure, and insufficient revenue mobilisation.

This was contained in the 2025 budget and macroeconomic outlook recently released by PricewaterhouseCoopers (PWC) Nigeria.

In the report, it was noted that Nigeria’s fiscal deficit declined from 6.2% of GDP in H1 2023 to 4.4% in H1 2024, driven by higher non-oil revenues following the removal of foreign exchange subsidies and reforms to enhance transparency in Government-Owned Enterprises and MDAs.

The report noted that addressing the fiscal challenges “will require urgent efforts to enhance revenue generation and implement fiscal consolidation measures.”

Daily Trust reports that Nigeria’s debt rose to N142 trillion by the third quarter of 2024 according to the Debt Management Office (DMO) figure with the figure driven largely by depreciation.

The report however added that Nigeria’s total debt in 2025 “will be shaped by its exchange rate dynamics and planned fiscal deficit.”

PWC analysts  observed that foreign exchange (FX) stability is a pivotal issue in Nigeria, as the naira depreciated by average of 39.8% in the official market in 2024 despite external reserves growing to $38.67 billion.

“The ease of the volatility in 2025 will be centered around five critical factors, which include price discovery, transparency and market friction, liquidity, supply-demand backlogs and Market and investor confidence.

The report noted that in 2025, inflation will likely be influenced by several factors, including monetary phenomenon, supply-side dynamics, cyclical elements, sector-specific inflation, and the effects of inflation rebasing,” the report stated.

On the monetary policy rate, the report explained that the “elevated MPC rates at 27.5% is making borrowing more expensive for businesses and consumers, potentially slowing down the access to credit to accelerate economic growth.