The Federal Government projects personnel and pension expenses to rise sharply in 2025, driven by the implementing of the new minimum wage. According to the Medium-Term Expenditure Framework (MTEF) for 2025-2027, costs are expected to grow by 58.7%, increasing from N6.07 trillion in 2024 to N9.64 trillion in 2025. This rise includes significant adjustments in salaries, pensions, and related contributions, highlighting the fiscal pressure of sustaining government operations.
Personnel costs for Ministries, Departments, and Agencies (MDAs) are forecasted to surge from N4.79 trillion in 2024 to N7.17 trillion in 2025, a 49.7% jump, while costs for Government-Owned Enterprises (GOEs) are expected to rise by 67.2%. Pension obligations will nearly double from N673 billion in 2024 to N1.44 trillion in 2025, reflecting the broader impact of the wage policy. Total recurrent non-debt expenditure is projected to reach N14.21 trillion in 2025, intensifying fiscal challenges amid limited revenue.
While the wage increase benefits formal sector workers, the World Bank cautions that it impacts only 4.1% of working-age Nigerians, emphasizing the need for sustainable, productive employment to address poverty. The rapid rise in personnel and pension costs poses significant fiscal sustainability concerns for Nigeria’s economy, already burdened by revenue deficits and pressing development needs.
