As Guyana prepares for its 2025 Budget, the government has proposed a spending plan of G$1.1382 trillion (approximately US$6.629 billion), marking a 20.6% increase from the previous year's budget of G$1.145 trillion (US$5.496 billion). This budget is significant as it positions the Central Government to account for 63% of the current non-oil GDP, up from 57% in 2024 [edf97ccf].
The ambitious budget comes on the heels of remarkable economic growth, with real GDP expanding by 144.6% from 2021 to 2025, primarily driven by oil exports. The government projects an overall economic growth rate of 10.6% for 2025, while the International Monetary Fund (IMF) estimates a more optimistic growth rate of 14.4% [edf97ccf].
However, concerns are mounting regarding the sustainability of this fiscal approach. The projected fiscal deficit for 2025 stands at 14.4% of non-oil GDP, raising alarms about the long-term viability of such spending levels. To address this deficit, the government plans to cover 94.3% through foreign borrowing, which has implications for the country’s external debt stock, which has surged from US$1,392.8 million in 2021 to US$3,689.4 million in 2025 [edf97ccf].
In a parallel context, Nigeria's states are also grappling with budget execution for 2025. Dr. Lawrence Nwaodu emphasizes that effective budgets should represent 15-20% of GDP for developing countries, highlighting the need for states like Imo to secure a budget of N1.15 trillion to stimulate their economies. However, states face significant challenges due to high debt levels, with total state debt exceeding N11.4 trillion [b77022d2].
The recent increase in Nigeria's minimum wage by 130% from N30,000 to N70,000 is expected to strain personnel costs further, prompting states to focus on internal revenue generation to reduce reliance on federal transfers. Additionally, with oil prices predicted to drop to $40 per barrel, the financing of state budgets may come under pressure [b77022d2].
In a recent announcement, Nigeria's Finance Minister Wale Edun outlined plans to finance the 2024 budget deficit, estimated at 3.9% of GDP, by borrowing from financial markets rather than resorting to printing money. This strategy aims to curb inflation, which currently stands at 34.80%, and restore investor confidence amidst challenges in oil production due to insecurity and theft [0d649510].
Both countries highlight the necessity for collaboration and partnerships to ensure sustainable budget financing. In Guyana, the reliance on the Natural Resource Fund (NRF) and the significant increase in money supply—up 25.3% in 2024—has raised concerns about potential inflationary pressures [edf97ccf]. Meanwhile, fiscal efficiency and discipline are critical for successful budget implementation in Nigeria as well [b77022d2].
As both nations navigate their economic futures, the balance between stimulating growth and maintaining fiscal discipline will be crucial in determining the success of their respective budgets for 2025.