The Institute of Economic Policy is cautioning against the heavy reliance of the 2025 Budget on social interventions.
According to the institute, this may have both positive and negative consequences.
In its critique of the 2025 Budget, the IEA said it is prudent to invest more of the country’s resources today to produce a bigger national income and then share it as equitably as possible.
On the other hand, it said “if we place equity first, we may likely end up with a smaller national income to share in the future”.
While retaining the Senior High School’s free benefits, free nursing trainee allowance, free teacher training allowance, free Livelihood Empowerment Against Poverty (LEAP) and free National Health Insurance Policy (NHIS), the 2025 Budget also proposed free first-year university fees, free primary health care and free sanitary pads for school girls, among others.
The IEA said these free benefits are economically and socially beneficial.
However, it said they place a substantial burden on the budget and leave limited space to undertake more productive activities.
This is precisely because the budget is dominated by compensation of employees and free benefits that the investment spending component is severely squeezed, which it said constitutes a drag on economic growth.
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