President Bola Tinubu’s recent appeal to the National Assembly for approval to borrow $24.14 billion from external lenders is yet another warning sign that Nigeria is spiraling towards a deeper fiscal crisis. While a national newspaper editorial on June 1, 2025, rightly criticized the request as symptomatic of a growing debt burden, it incorrectly claimed that government revenues are showing signs of recovery. In truth, when measured in dollar terms instead of the rapidly depreciating Naira, the federal government’s revenues reveal a bleak reality. The stark decline in dollar revenue is one of the key reasons Nigeria is, once again, seeking loans to plug its financial holes.
In fact, the loan request did not come as a surprise. Earlier this year, VANGUARD had predicted such a move, citing budgetary imbalances and unrealistic fiscal expectations.
—
Budgetary Illusion: A Recurring Danger
“The most obstinate illusions are ultimately broken by facts.” – Trevor Roper, The Last Days of Hitler
One of the most perilous pitfalls of economic governance is budgetary illusion — the deliberate inflation of revenue expectations to paint an optimistic picture. Nigeria’s past three presidents — Goodluck Jonathan, Muhammadu Buhari, and now Bola Tinubu — have all fallen into this trap, each presenting budgets based on unrealistic projections that eventually fuelled larger debts and fiscal instability.
The latest $24.14 billion loan request may not even be the final one this year. More troubling is the fact that no reasonable revenue projection at this point can convince Nigerians that the debt can be serviced without resorting to more borrowing. The core of this fiscal gloom lies in a stubborn refusal to accept the country’s current oil production limitations. The federal government continues to base budgets on a production estimate of 2 million barrels per day (mbpd), despite evidence suggesting otherwise.
As of May 2025, production has hovered around 1.5mbpd from January through April — creating a monthly shortfall of 500,000 barrels or 14 million barrels. This translates to a revenue loss of approximately $1.125 billion per month, and $5.625 billion over the past five months. Every barrel is also selling for at least $10 less than the $75 benchmark price set in the budget, adding another $2.1 billion in revenue deficits. Altogether, the government is contending with a negative variance of $8.6 billion in just five months, which helps explain the urgency behind the loan request.
—
Political Budgets, Not Economic Blueprints
The 2025 national budget, like many before it, reads more like a political statement than a credible economic plan. From professional experience serving on the budget committee of a U.S. multinational corporation, I know that successful budgets depend on a small set of highly accurate forecasts. For Nigeria, the key factors are: oil production, average oil prices, exchange rates, and internally generated revenue. When actual results diverge too widely from projections, budget deficits soar, and governments resort to borrowing.
On December 28, 2024, I wrote in Weekend Vanguard that Nigeria would likely not exceed 1.5mbpd in oil production throughout 2025. The federal government, however, went ahead and based the 2025 budget on an ambitious and unrealistic figure of 2.06mbpd. As predicted, five months in, the production has remained closer to 1.5mbpd, resulting in massive shortfalls that now threaten to derail the entire fiscal plan.
—
Ignoring Global Realities: A Pattern of Neglect
“Global oil demand growth is projected to slow from 990,000 barrels/day in Q1 2025 to 650,000 barrels/day due to economic headwinds and record EV sales.” – Google Report
Successive Nigerian administrations have operated as though global economic forces do not apply to them. This misconception has led to consistently flawed budget projections and painful economic outcomes. Even during Ngozi Okonjo-Iweala’s tenure as Coordinating Minister for the Economy, the government projected oil production figures above Nigeria’s OPEC quota. The 2013–2015 Medium Term Expenditure Framework (MTEF) assumed 2mbpd, ignoring OPEC’s limit of 1.7mbpd.
Why a government would deliberately set targets it is internationally restricted from achieving remains puzzling. Despite failing to meet the 2mbpd target in 2014, the same projection was made for 2015. The pattern of overestimating oil production has since continued under Buhari and now Tinubu. Buhari compounded Jonathan’s error by delaying the appointment of ministers, assigning the Finance Ministry to an accountant with little economic foresight, and basing all eight of his budgets on the 2mbpd myth.
Tinubu inherited this unrealistic structure with the 2023 Budget and has since submitted two more budgets grounded in the same flawed logic. The result? The 2024 budget collapsed under economic pressure, and the 2025 budget is already unravelling due to global factors Nigerian leaders refuse to address.
—
The Age of Oil Is Ending
“Everything comes to an end.”
The world is transitioning away from fossil fuels. China, the U.S., the EU, and India — which together consume about 75% of global oil — are rapidly adopting electric vehicles (EVs). Even Saudi Arabia, the heartland of oil, is investing heavily in hydrogen fuel. Few new cars run on petrol today, and the demand for crude is steadily declining. So, even if Nigeria could produce 2mbpd, the global demand needed to absorb that supply is dwindling.
It is time for Nigeria’s leadership to face this new reality and stop clinging to outdated projections. Tinubu must urgently surround himself with economic experts capable of crafting practical, realistic budgets — ones that account for both domestic limitations and the fast-changing global landscape.
