Nigeria’s Minister of Finance, Wale Edun, announced that the country’s revenue to debt service ratio has improved significantly, dropping from 97% in 2023 to 68% in 2024.
This change indicates a reduction in the government’s debt burden. Edun made these remarks during a press briefing with journalists on Thursday in Abuja.
Edun emphasized that the country’s revenue management now promotes transparency, accountability, and visibility in government spending.
He highlighted that Nigeria no longer relies on ways and means advances from the Central Bank to meet its fiscal obligations.
“There has been a reconfiguration of the processes and the procedures to give greater visibility, transparency, and accountability in government spending. That’s the way the government can earn the trust of the people that their money is being spent wisely. This government has exited ways and means borrowing,” Edun stated.
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He also noted that total debt service has decreased from 97% of revenue in the first half of 2023 to 68% in 2024. Furthermore, the federal government aims to reduce the inflation rate to between 20% and 25% by the end of the year, a target also signaled by the Central Bank of Nigeria.
The government is creating incentives in the agricultural sector as well as the oil and gas industry to drive economic growth and productivity. Edun expressed optimism that Nigeria’s debt stock would decline to approximately $95 billion.
“There is a focus on inflation, production, and supporting businesses as a whole. As part of the implementation plans of the short-term stabilization package, particular focus will be given to driving food inflation and creating an improved investment climate for oil and gas.
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“By the time we can have a successful harvest and can reduce post-harvest losses, we expect inflation to come down between 20 and 25%. This has already been signaled by the Central Bank. We expect the total debt stock to be below, in dollar terms, $95 billion. And we expect budget deficits to be around 4%, which is the target,” Edun added.
Under the previous administration of President Buhari, the federal government borrowed a substantial N27 trillion from the Central Bank in ways and means advances. This surge in debt led to increased cost-push inflation and an excess supply of money in the economy.
According to the new Central Bank Governor, Yemi Cardoso, the current inflationary pressure on the economy is largely driven by the consequences of this excess money supply.
Nigeria’s inflation rate peaked at a 28-year high of 34.19% in June, according to the National Bureau of Statistics (NBS).
In response, the Cardoso-led monetary policy committee has continued to raise the interest rate, currently at 26.75%, in an effort to control inflation in the country.