Experts Project Over N13tn Fiscal Deficit, N100tn Public Debt for Nigeria in 2024 

Nume Ekeghe

Experts in Nigeria’s financial service sector have predicted Africa’s biggest economy’s 2024 fiscal deficit will surpass N13 trillion, exceeding the estimated deficit of N9.2 trillion.

Additionally, they predict Nigeria’s debt stock will surpass N100 trillion by mid-2024, maintaining a high debt-to-service ratio of over 60 per cent.

Experts at Afrinvest Limited disclosed this in their 2024 outlook titled, “Pulling Back from the Precipice,” where they also anticipate a moderately improved macroeconomic environment.

Reviewing the 2024 budget, they stated: “Aggregate revenue projection is overly optimistic given the prevailing weak macroeconomic environment and continued inefficiencies in many of the federal government revenue-generating agencies.

“Expectations of a 43.9 per cent share of the projected revenue from oil & gas is unrealistic. This is due to agreed OPEC+ output cut till 2024, incessant sabotage in the oil-rich Niger-Delta, and the time lag required for the new exploration licenses to manifest gains.

“On the balance of analysis, we estimate the fiscal deficit to exceed N13.0 trillion (assuming CAPEX implementation is not relegated) as against the N9.2 trillion budgeted. Consequently, we see total public debt stock crossing the N100.0 trillion mark by mid-2024 from N87.4 trillion in June 2023 while debt-service-to-revenue is estimated to remain above the 60.0 per cent level.”

On what would boost the economy in 2024, they noted that the economic outcomes would depend on how the current administration can carry through with the on going reforms, improve the business environment to end the recent spate of closure by mid and large-sized business entities, improve national security, enhance internal shock absorbers to external risks, and narrow structural gaps.

According to the experts: “Based on our scenario models, GDP growth, inflation, and FX rate would average 3.0 per cent, 22.1 per cent, and N918.89/$ in 2024 blue-sky case, while the average outcomes could deteriorate to -1.5 per cent, 24.7 per cent, and  N1,057.19/$ should policy fatigue set in and external risks mount.

“Shifting focus, the Nigeria equities market raced to a 15-year high in 2023 fuelled by market-friendly reforms implementation by the current administration and resilient corporate performance. We expect the equities market to sustain the positive momentum through 2024, though at a modest pace. Our model forecasts a 14.8 per cent return for the year, premised on improved macroeconomic conditions, anticipated growth in Foreign Portfolio Investments, and a more stable FX environment.”

On the fixed-income market, the analysts stated that 2023 was bearish owing to tightened financial system liquidity by the CBN and the borrowing footprints of the federal government.

“Across market segments, yields reprised in favour of the bears to close around 8.0 per cent and 14.0 per cent levels for benchmark NTB and FGN Bond instruments. The outlook for 2024 is cautiously optimistic, predicated on robust liquidity dynamics and positive inflation – and interest rate – expectations.

“We anticipate that the CBN might adopt restrictive stance to counter large inflows in the first half of the year. This could be the major upside trigger for yields. However, we see pathways for tapering of yields into the second half with dovish pivots by systemic central banks, moderating inflation and less restrictive CBN stance as potential factors to weigh on the yield environment, ”they stated.