Nairametric Q3 outlook: Expert Express Worry over Nigeria’s 18trillion Budget Projection

Dr. Muda Yusuf, the Chief Executive Officer, Centre for Promotion of Private Enterprise (CPPE), said revenue projection of about 18trillion for the 2024 National Budget maybe under very serious risk.

He noted this yesterday, Saturday, 13,October,2024 at the Nairametrics Q3 Macroeconomic Outlook ” Renew Hope or Reality Check? identifying opportunities in a volatile Economy”.

According to him, “It’s not looking a bit optimistic given what is happening to our Oil output and given the fact that we are now having challenges with our debt. Our debts is growing at a level that is making some of us very uncomfortable particularly from the point of view of debt service. Our debt to GDP ratio which used to be used to be around 20, to 23 to 25 is now close to 50%.

“And that of course have the implication for debt service to revenue, so i would expect to get an implication for public finance, i think its something that we should worry about. At the inception of the administration, particularly the reforms, we had a much better situation with the fuel subsidy, it was practically removed entirely at the inception of the administration but with what has happened between then and now, and with what has happened with the exchange rate and the relativity of the strength of our currency in comparative terms with our neighboring country.

Earlier, Mr.Ugodre the chief host and the the founder of Nairametric, in his opening remark, noted that the Federal Government of Nigeria has been battling higher inflationary environment, the sum total of; high energy prices, currency depreciation, money supply, insecurity and logistics. on the Fiscal crisis front, he mentioned largely ineffective budgets, high fiscal deficits and increase in public debts.

Ugodre noted that the Economy has witnessed “Tepid Economic Growth Rate, which is a function of lack of ease of doing business, weak crude oil output, ineffective government policies and weaker manufacturing output. While juxtaposing the core of the “Renew Hope guiding policy objective of the current administration and the stark reality confronting Nigerian.

He noted that the renew hope policy actions and objectives has birthed; subsidy removal, forex reforms, interest rate hikes, with coressponding higher inflation, massive forex depreciation, the exit of Multinational Organisation, “Japa” and weak purchasing power.

Speaking further, the former Lagos Chamber of Commerce boss,commended Presidential Committee Tax reforms initiative of the Federal government of Nigeria, which he said will impact positively on the public finance.
“i think one needs to highlight that one of the things the adminstration did when it took over was to address the issue of tax and fiscal reform which had led almost immediately to the setting up of Presidential Committee on Tax reforms and our expectation is that with this presidential committee a lot will happen that will impact positively on public finance.

“The result is been revealed piecemeal, some have been announced, while others are still been worked on, but our expectation is that we see much more improvement in our tax revenue, particularly we the promise of leveraging technology to improve tax revenue.

“In the first six months of the administration, we had a very good action on fiscal consolidation which is about optimizing revenue and also reducing expenditure. But more importantly on the revenue side. The reform improved on the revenue side significantly, i am talking about the fuel subsidy removal which unfortunately seems to have been back, and the Foreign Exchange reform, so that improved significantly. But recently in the second half, we are beginning to see some risks to this public finance or fiscal consolidation of government.

Muda, however express worry over the skyrocketing growth of Debt to GDP growth, “Our debts is growing at a level that is making some of us are very uncomfortable with particularly from the point of view of debt service. Our debt to GDP ration which used to be far around below 50, which used to be around 20, to 23 to 25 is now close to 50%.

And that of course have the implication for debt service to revenue, so i would expect to get an implication for public finance, i think is something that we should worry about. At the inception of the administration, particularly at the inception of the reforms, we had a much better situation with the fuel subsidy, it was practically removed entirely at the inception of the administration but with what has happened between then and now and with what has happened with the exchange rate and the relativity of the strength of our currency in comparative terms with our neighboring country.

Dr. Tope Fasuba, special adviser on Economic Affairs, the Office of the Vice President, another eminent member of the panel, brought to bear his expertise and insight, and gave an incisive analysis to the transformation agenda of the current administration.

He noted that the current administration, has implemented policies such as; fuel subsidy removal, the floating of the naira, and “the Way and Means”. while commenting that there are no perfect policies, he noted that successful settled an appreciable amount totaling 7.3trillion away from N30trillion, thus commending the effort of the government.

“Apart from the political reforms and public sectors, we have three serious reforms in the economy, of course, the first one is the fuel subsidy, the second naira floating, and we know the effect of that, you know its very risky, especially the floating of the naira. It seems to put pressure on the subsidy removal, the more the naira is floated, and of course we need to also continue to look at that policy, because, like i said earlier, no policy is perfect.There is one other policy that i like to mention , which we usually dont talk about, and that is these “Ways and Means.

“We have about 30 trillion ways and means which the government have been able to pay about N7.3trillion out of that according to the coordinating minister of economy, that i think is very good. I think one thing we have done successfully is taking on these reforms, and like the Nigeria Central Bank Governor said yesterday, we have paid the sum of 7.5billion dollars in terms of obligation ot the Central Bank made on ground which is quite remarkable. Although there are also associated risks, but this is a government of accountant”