LCCI Urges Federal Government to Reconsider 2025 Budget Parameters

• The Lagos Chamber of Commerce expressed concerns over the Federal Government’s proposed ₦47.9 trillion budget, deeming its assumptions overly optimistic
• LCCI criticized the proposed exchange rate and inflation projections, warning that unsustainable debt levels could hinder economic growth and stability

The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the Federal Government’s proposed 2025-2027 Medium-Term Expenditure Framework (MTEF) and the accompanying N47.9 trillion budget.

While acknowledging the proposal’s sensitivity to current macroeconomic conditions, the LCCI described the budget assumptions as overly optimistic and misaligned with prevailing economic realities.

In a statement issued by its Director-General, Dr. Chinyere Almona, the LCCI highlighted several key areas of concern:

The proposed exchange rate of N1,400 to a dollar was deemed “too fragile,” considering the current official rate, which closed at N1,690 on the Nigerian Autonomous Foreign Exchange Market (NAFEM).

The chamber also criticized the assumption of a 15.8% inflation rate in 2025, noting that with inflation currently at 33.88% as of October 2024, expecting such a drastic decline within a year is unrealistic.

The LCCI expressed alarm at the proposed 91.2% increase in debt servicing, amounting to N15.38 trillion, representing 32.1% of the total budget. Coupled with a projected deficit of N13.08 trillion and plans for N9.22 trillion in new borrowings, the chamber warned that the rising debt burden—already at N134 trillion as of June 2024—is unsustainable.

Dr. Almona pointed out that businesses are grappling with high borrowing costs, exacerbated by a Monetary Policy Rate of 27.25%. This and surging inflation create a challenging environment for private sector growth.

The LCCI advised the Federal Government to adopt a more realistic approach to its budget assumptions and focus on policies that foster economic stability. Key recommendations included:

1. Reevaluating Budget Assumptions: Align inflation, exchange rates, and economic growth projections with current economic indicators.
2. Debt Management: Prioritize fiscal discipline to reduce the unsustainable rise in debt servicing and borrowing.
3. Private Sector Empowerment: Address structural challenges and provide clarity on economic policies to create an enabling environment for businesses to thrive.

The LCCI underscored the need for the Federal Government to strike a balance between revenue generation, fiscal sustainability, and economic growth to effectively navigate the current economic challenges.