Despite revenue shortfall in the 2025 fiscal year, the Nigeria economy has not only turned the corner, but recorded significant growth across macroeconomic indicators. High inflation which stuck in double digits for most of the last 35 years and rose to 34.6 per cent as of November 2024 has dropped to 14.45 per cent in November 2025. At $46 billion, foreign reserves can cover over 10-months imports, while the naira has remained stable across markets. FX inflows reached $20.98 billion in the first 10 months of 2025, a 70 per cent increase over total inflows for 2024, reflecting a clear resurgence in investor confidence.
Nigeria’s economic managers have in recent years, been laying the groundwork for a sustainable recovery and growth of the economy.
For many pundits, the success seen across key macroeconomic indicators like inflation rate drop, exchange rate stability and sustainable foreign reserves accretion have dwarfed whatever shortfall in revenue recorded during the 2025 fiscal year.
In the spirit of transparency, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, when appeared before Federal lawmakers early in the week, said that the Federal Government recorded a significant revenue shortfall in the 2025 fiscal year.
Edun explained that of the projected N40.8 trillion revenue for this year, the Federal Government achieved N10.7 trillion, creating N30 trillion revenue shortfall.
Also, of the N54.46 trillion projected aggregate expenditure for 2026, the Senate pegged capital expenditure at N20.131trillion, recurrent expenditure at N15.265 trillion, statutory transfers at N3.152trillion, and Sinking Fund at N388.54billion.
Also, the Senate approved the $60 per barrel as oil benchmark (down from N64.85 proposed by the executive), projected aggregate revenue of N34.33trillion, fiscal deficit of N20.13 trillion, borrowings at N17.88trillion, debt service of N15.52trillion, pensions, gratuities, retirees’ benefits of N1.376trillion, 1.84 mbpd as crude oil production, inflation rate of 16.5 per cent, exchange rate of N1,512 per $1 and GDP growth rate at 4.68 per cent.
A Lagos-based financial analyst, Michael Nwadike, said the revenue target though ambitious, but played key role in ensuring that the recorded revenue still remained remarkable.
He said the Federal Government was able to control its spending, since the economic managers realized early enough that there will be revenue shortfall.
“I think the economic managers have made the best use of the revenue for the year by controlling spending, and working hard to achieve the revenue milestone for the year.”
“That balancing act helped to keep the economy in good shape, and strengthened the economic fundamentals as seen in inflation rate drop, more accretion to the foreign reserves and stability in exchange rate,” he said.
The Director-General, the West African Institute for Financial and Economic Management (WAIFEM) Dr. Baba Musa, called on government to ensure that 3.9 per cent growth for Nigeria in 2025 translate to decent jobs, rising incomes, improved productivity, and broader social welfare.
In his report presented at the recently concluded 2025 IMF/World Bank Annual Meetings in Washington DC, titled: “Nigeria’s Economic Outlook at a Turning Point”, he said as Nigeria moves further into 2025, Nigeria’s economic story is one of resilience, renewal, and strategic recalibration.
Musa, who is also the President, Nigerian Economic Society, said Nigeria’s economic trajectory is increasingly encouraging with the International Monetary Fund (IMF) projecting real Gross Domestic Product (GDP) growth of 3.9 per cent in 2025, up from 3.5 per cent in 2024, with further acceleration to 4.2 per cent in 2026.
Musa said Nigeria in 2025 is at a critical inflection point, cautiously optimistic yet structurally fragile. “Gains in growth, inflation moderation, and investment confidence mark important progress, but the work is far from complete. To sustain the recovery, Nigeria must maintain macroeconomic stability, deepen structural reforms, and ensure that growth translates into tangible improvements for citizens. Achieving this requires collaboration among government, private sector, civil society, and development partners,” he said.
According to him, by committing to policy consistency, human capital investment, and inclusive growth, Nigeria can consolidate its recovery and emerge as a more competitive, resilient, and equitable economy in the years ahead.
“Globally, economies are grappling with slowing growth, projected at 2.7 per cent in 2025 by the IMF for advanced economies, and heightened geopolitical risks that affect trade and investment. Against this backdrop, Nigeria has demonstrated remarkable determination. Domestically, inflationary pressures, infrastructure deficits, and unemployment persist, yet they now represent policy frontiers rather than defining constraints,” he said.
The journey so far
Speaking during the 2025 Bankers’ Dinner held in Lagos, Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, said the story of Nigeria’s economic recovery cannot be appreciated without first recalling where we started, because the reforms of today are borne out of a determination to change the conditions we met.
“When this leadership team assumed office, our economy faced severe macroeconomic distortions. Inflation was surging. FX liquidity had evaporated. External reserves were non-existent. Trust in economic management had weakened. Unorthodox monetary practices had eroded confidence. Businesses could not plan or price. Investors could not commit,” he said.
Cradoso explained that the foreign exchange market was in paralysis. “A backlog of over US$7 billion in unmet FX obligations undermined market integrity. The spread between official and parallel market rates had blown out to more than 60 per cent, creating distortions and rent seeking opportunities.
High inflation had become normalised, stuck in double digits for most of the last 35 years and risen to 34.6 per cent as of November 2024. Food prices were crippling households. Liquidity conditions were unstable. Many businesses faced an existential threat,” he said.
He said that the banking sector, though fundamentally sound, was at risk of being dragged into distress by a deteriorating macro environment and inconsistent policy signals.
“This was the Nigeria we inherited, not one standing at the edge of a macroeconomic precipice, but one that had already gone over the cliff. It is important to recall this not for drama, but for context: the progress we cautiously acknowledge today is meaningful only when measured against the depth of the challenges that came before it,” he said.
Sustaining economic turnaround
Over the past twelve months, Nigeria’s economy has transitioned from crisis management to laying the groundwork for a sustainable recovery. After nearly a decade in which real GDP growth averaged about two per cent, reforms have restored momentum and confidence in our broad macroeconomic environment.
“Our economy grew by 4.23 per cent in the second quarter of 2025, the strongest pace in four years, driven by improvements in telecommunications, financial services, and oil production.
“More importantly in terms of long-term stability, inflation, while still high, has moderated consistently. From a peak of 34.6 per cent in November 2024, it has more than halved to 16.05 per cent in October 2025. This marks seven consecutive months of disinflation. Food inflation, the largest single component of the basket, fell to 13.12 per cent in October, down from 16.87 per cent in September and 21.87 per cent in August”.
He said that the significant, steady decline in inflation is restoring real purchasing power for households and businesses. It also demonstrates disciplined execution and Nigeria’s return to orthodox monetary policy.
“We continue with determination to bring inflation down further. The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth. Our transition to an inflation targeting framework is gaining traction. We have improved data analytics, strengthened communication, and ended monetary financing of fiscal deficits. These actions have strengthened monetary policy transmission and anchored expectations,” he said.
“Our models project continued disinflation in 2026, helped by stronger domestic production, improved FX liquidity, and more disciplined liquidity management. As inflation moderates and becomes firmly anchored, we will calibrate the policy rate in line with evolving data”.
“Domestic and international observers alike have noted Nigeria’s “huge turnaround” in macroeconomic management. Our commitment remains clear: monetary policy will stay evidence-based, data-driven, and unwavering in its pursuit of price stability.”
Foreign exchange market reforms
Perhaps the most visible sign of renewed confidence in our economy is the transformation of the foreign exchange market. Over the past year, we have sustained the unification of the multiple exchange rate windows.
Today, the once crippling multi-billion dollar FX backlog has been fully cleared, restoring credibility and giving businesses the confidence to plan.
The introduction of the Nigerian Foreign Exchange Code has established clear rules for transparency, ethics, governance, and fair dealing among authorised dealers while the deployment of the Electronic Foreign Exchange Management System (EFEMS) system, powered by Bloomberg BMatch, has transformed FX trading through mandatory order submission, real time regulatory visibility, and enhanced price discovery.
Together, these reforms have reduced opacity and manipulation, and restored discipline to the market. The naira now trades within a narrow, stable range. The once substantial gap between the official and parallel markets has shrunk to under two per cent, down from over 60 per cent.
Foreign capital inflows reached US$20.98 billion in the first ten months of 2025, a 70 per cent increase over total inflows for 2024 and a 428 per cent surge compared to the US$3.9 billion recorded in 2023, reflecting a clear resurgence in investor confidence.
State of the naira
The naira has achieved a notable milestone, strengthening by 3.5 per cent against the U.S. dollar over the past ten months, reaching N1,450/$ at the parallel market. This recovery, though modest, signals a crucial shift, driven by coordinated adjustments to fiscal and monetary policies by the Federal Ministry of Finance and the Central Bank of Nigeria (CBN).
The start of the year saw the Naira trading at around N1,555/$. However, a brief period of instability saw the rate slip to a high of N1,597/$ by the end of April. The subsequent six months were marked by intense policy intervention. The naira briefly firmed up at N1,475/$ in October 2025 at the official market before settling at N1,500/$ at the parallel market yesterday, marking a 3.5 per cent gain from the January starting point.
Cardoso has also highlighted the positive impact of monetary policy decisions including making naira more competitive at the international markets, and improving investment climate for global investors.
External sector progress
Nigeria’s external sector strengthened decisively in 2025, with the current account balance rising over 85 per cent to US$5.28 billion in Q2, up from US$2.85 billion in Q1.
Bolstering our external buffers, foreign reserves reached US$46.7 billion by mid-November, the highest in nearly seven years, providing over 10 months of forward import cover and significantly enhancing the economy’s resilience.
What is most important here is that our FX reserves are being rebuilt organically, not by borrowing, but through improved market functioning, stronger non oil exports, and robust capital inflows.
While oil production improved modestly to an average of 1.45–1.52 million barrels per day in 2025, the truly encouraging development is the strong performance of non-oil exports. Supported by ongoing reforms and greater exchange-rate flexibility, non-oil exports have grown by more than 18% year-on-year, reflecting rising competitiveness under a truly market-driven FX framework.
For many stakeholders, the ongoing alignment of fiscal and monetary policies is indispensable at a time when technological innovation and digital finance are rapidly transforming the financial landscape.
