Budget Minister Defends Expansionary Spending, Says It’s Key to Economic Growth
Amid growing concerns over Nigeria’s increasing budget size and deficits, the Federal Government has defended its preference for an expansionary fiscal policy, which involves running large budget deficits and accumulating debt. Senator Abubakar Bagudu, Minister of Budget and Economic Planning, explained the government’s stance during a media chat in Lagos, stating that the expansionary budgetary system is crucial for driving economic development.
Bagudu emphasized that many economies with populations similar to Nigeria’s, such as Brazil and Indonesia, have adopted similar fiscal policies and are now far ahead in terms of development. He noted that these countries have budgets exceeding 200 times that of Nigeria, underscoring the need for aggressive investment in infrastructure and the real sector to catch up.
“Many other economies with the same population range as Nigeria’s were driven by similar budgetary systems,” Bagudu said. “Brazil and Indonesia are now far ahead of Nigeria, with budgets in excess of 200 times that of Nigeria. We need to adopt a similar approach to accelerate our development.”
The Minister justified the recent increase in Nigeria’s 2025 budget, which was raised from N49.7 trillion to N53.2 trillion, despite concerns about its size and the sustained deficit of N14 trillion. President Bola Tinubu had requested the additional N4.5 trillion increase, citing expected revenue growth. However, financial experts have criticized the decision, arguing that the increased revenue should have been used to reduce the deficit rather than fund additional spending.
Bagudu, however, defended the government’s approach, stating that expanding the economy is more critical than paying off debt. “Deploying the expected revenue increase to debt servicing is just an option available to the government, but the need to expand the economy as quickly as possible is more important,” he said. “If you expand the economy, you collect more taxes and increase revenue to fund sustained economic development.”
The Minister highlighted the urgent need for investment in underperforming sectors of the economy, including infrastructure, security, education, and healthcare. He pointed out that years of underinvestment have left critical areas of the economy and public services in a state of neglect.
“Part of the crisis we are confronting now is the realization that we have been under-investing in almost every area of our national economy and services,” Bagudu said. “That’s also why our police, security services do not have enough equipment and personnel, our roads are in poor condition, and our schools lack adequate facilities.”
Bagudu described Nigeria’s 2025 budget as ambitious, noting that President Tinubu aims to challenge his team to achieve aggressive infrastructure development and growth in the real sector. The expansionary fiscal policy, he argued, is essential for addressing the country’s infrastructure deficit and stimulating economic growth.
The Minister’s comments come at a time when Nigeria’s debt profile is rising, with concerns about the sustainability of its fiscal policies. Critics have warned that excessive borrowing could lead to a debt crisis, particularly if revenue projections fall short. However, Bagudu maintained
