The International Monetary Fund (IMF) has advised the Federal Government of Nigeria to adapt its 2025 budget to lower oil prices.
The Federal Government had assumed a price of $75 per barrel in its 2025 budget. Brent crude futures last traded at just over $68 a barrel.
The Federal Government had set a crude oil production target of 2.1 million barrels per day, and roughly N84.67 trillion crude oil revenue in its 2025 budget. This is based on an oil price of $75 per barrel.
However, the country has been struggling with its oil production, with output hovering around 1.4 million barrels per day.
Crude oil and condensate production climbed to 1.63 million barrels per day in May from 1.61mbpd in April.
Nigeria’s crude oil reserves are estimated at 37.28 billion barrels as of January 1, 2025, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This includes 31.44 billion barrels of proven and probable (2P) crude oil and 5.84 billion barrels of condensate.
However, the country’s oil production levels have been affected by factors like pipeline vandalism, theft, and terminal shutdowns.
The challenges have not only led to shortfalls in locally targeted output, but Nigeria has also been unable to meet its OPEC’s 1.5 million barrels per day quota.
Low crude oil production also affected the country’s revenue, coupled with the ongoing war between Iran and Israel, which had seen a significant drop in crude oil prices.
In its recently published ‘Article IV’ assessment of Nigeria’s economic policies, the IMF said economic growth had been steady but too low in per capita terms, with inflation remaining high. The Fund predicted that the country’s economy would expand at 3.4% this year and 3.2% in 2026.
IMF stated thus:
“Ensuring that the fuel subsidy savings accrue to the government would yield the proposed neutral stance—the full-year savings are estimated at two per cent of GDP. If the savings are not realised starting H2-2025 and given that tax policy reforms under consideration are not expected to deliver significant revenue gains in 2025, adjustment would have to come from the expenditure side (0.6 per cent of GDP). Nigeria should prioritise adjustments to recurrent spending to protect growth-enhancing investments”.