Bismarck Rewane has advised the federal government to ensure efficient spending and work to improve local productionThe renowned economist called out the overambitious inflation rate target, as noted in President Tinubu’s proposed budgetHe, however, hinted at the likelihood of the inflation rate increasing in December because of the festivities associated with the month
Given the current economic challenges facing Nigerians, it would be impractical for the federal government to aim for an inflation rate of 15% by the end of 2025.
According to Bismarck Rewane, a prominent economist and managing director of Financial Derivative Company (FDC), this would be not just aspirational but overambitious.
Rewane noted that even experts have forecast Nigeria’s inflation rate to stay between 25% and 28% by the close of 2025.
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It would be recalled that Henzodaily.ng reported that President Bola Tinubu would present the N47.9tn 2025 budget to the joint session of the National Assembly on Wednesday, December 18.
15% inflate rate target impractical
Speaking during an interview on ChannelsTV’s Sunrise Daily, Rewane argued that the inflation target of 15% outlined in the Medium Term Expenditure Framework is overly optimistic and unlikely to be achieved,
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He noted that even experts have forecast inflation to stay between 25% and 28% by the close of 2025.
He said:
“This is not to preempt the budget presentation, but the inflation target of 15% as we see in the Medium Term Expenditure Framework, is over ambitious. I do not think that we are going to get down to 15% inflation in the near term.
Even if inflation begins to moderate, at the end of 2025, most analysts are of the opinion that the best it will be is between 25 to 28%. So, the budget could be aspirational, it could be ambitious, but to be successful is to be realistic, and I do not think that 15% inflation is going to be achieved.”
Rewane described the exchange rate projection of N1400/$ as more realistic than the N800 projected in the last budget, adding that a growth target of 3% to 4% would be achievable if the government ensures efficient spending in 2025 and improves local production.
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Rewane expects further rise in December
Rewane also commented on the recently released inflation figures from the NBS, noting that they are consistent with earlier forecasts.
He said:
“We are in an inflationary environment and this is the third consecutive monthly increase even though the rate of increase is slowing. What this means, though, is that the whole idea of seeing inflation taper towards 30% by the end of 2024 is not going to materialize.”
Rewane noted that December is typically marked by rising prices of essential and non-essential goods due to festive activities, likely leading to further inflation growth. However, he projected an inflation rate of 32-33% by early 2025.
FG targets new borrowing in 2025
Meanwhile, Henzodaily.ng earlier reported that the federal government is expected to borrow in 2025 to finance the 2025 budget already approved by FEC.
The 2025 budget is worth N48 trillion and has a deficit of N13 trillion, which will be financed through borrowing.
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The federal government says the 2025 budget is designed to promote fiscal sustainability, focusing on balancing government spending and encouraging the private sector.
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Source: Henzodaily.ng