Repositioning the economy and what the numbers are saying

On Thursday in Abuja, minister of finance, Wale Edun, addressed a press conference and gave a mid-year report on the economy. The minister told the press what President Tinubu’s administration had done in the last year to address some of the structural imbalances in the economy, working with the fiscal and monetary authorities.

The minister, who will now address a quarterly media briefing on the state of the economy, highlighted that the economy grew faster in the first quarter of 2024 than in the first quarter of 2023.

According to him, economic activity in the first quarter of 2024 was not only faster than the first quarter of 2023, but it was also the second fastest first-quarter growth in the last six years.

Edun noted that the economic growth was broad-based across several sectors, including agriculture, industries, and services. The minister specifically mentioned that the agricultural sector recovered from a negative position in the first quarter of 2023 to a modest growth in the first quarter of 2024. As the minister pointed out, the industrial sector also grew seven times faster in the first quarter of 2024 than in the first quarter of 2023.

Edun linked the positive economic performance and upswing to the government’s well-coordinated fiscal and monetary policies.

On the revenue side, the coordinating minister of the economy explained that aggregate federal government revenue in the first half of 2024 was more than double of the corresponding period in 2023. According to the minister, the growth in government revenue was due to the reconfiguration and improvement in government finances, with oil revenue as a percentage of gross revenue increasing from 11 per cent in the first half of 2023 to 30 per cent in the first half of 2024.

Here are the numbers as presented by the minister:

1. Non-oil revenue: The government’s determination to mobilise non-oil revenue has consistently delivered impressive results. For the half-year 2024, non-oil revenue not only surpassed the revenue in the first half of 2023 but was also 30 per cent above the 2024 budget target without any increases in taxes.

2. National debt burden: The Tinubu administration in the words of the minister has been working to manage and reduce the national debt to create better fiscal headroom for economic management. In dollar terms, Edun pointed out that Nigeria’s debt burden has reduced and the government’s fiscal deficit has improved.

“Our debt has fallen in dollar terms from $108 billion to $91 billion. Additionally, the government has diligently serviced all its loans and obligations with no recourse to ways and means of financing. The government has met all its obligations,” Edun said.

3. Ways and means: In the last year, the administration has exited the Ways and Means debt trap due to better management of the fiscal space, as the Federal Government, under the leadership of the President, has not relied on borrowing from the CBN Ways and Means to fund its obligations. Edun pointed out that part of the inflationary pressure the country is currently experiencing was a result of the past abuse of ways and Means. The federal government has paid back the previous N7.3 trillion obligation within a year of President Bola Tinubu’s administration.

4. Debt service to revenue: In meeting its debt obligations to avert any form of default, the Federal Government of Nigeria, for decades, has been spending more than half of its revenue on debt servicing. By the end of June 2023, the federal government was spending 97% of total revenue to service debt. In the last year of President Tinubu, the country has recorded a positive trend in the debt service-to-revenue ratio. Currently, the debt service-to-revenue ratio has declined from 97 percent in the first half of 2023 to 68 percent in 2024, indicating the government’s strong position in managing its debt obligations.

5. Budget deficit: It has been a major priority for economic managers to reduce the budget deficit. To achieve this, the federal government, in the last year of the Tinubu administration, improved government revenue collection and blocked a lot of leakages. At the media briefing, Edun noted that the 2024 budget deficit has moved in the right direction, with a target of 4.1 per cent of GDP, an improvement from the 6.1 per cent deficit recorded in 2023.

“On an annualised basis, we are at 4.4 per cent, so you can see we are effectively very, very close to the budgetary target,” Edun said.

6. Foreign inflows: The government’s efforts to attract more foreign inflows into the economy continue to yield good outcomes. The minister said the government will continue the reforms and improve the business environment to engender confidence further. Edun underscored the government’s efforts to attract foreign inflows, including implementing the national single window project, which he said will generate $2.7 billion annually in economic benefits. The minister added that the government’s accelerated stabilisation and advancement plan has already attracted $500 million in investment in the gas sector, with $7 billion more on the sidelines waiting to come in.

7. Inflation and high cost of living: To address the current high cost of living and bring more relief to the masses, the minister again pointed out that the government has implemented several initiatives and interventions, including a strategic input programme to increase the supply of food, a pivot to Compressed Natural Gas (CNG) fuel for mass transit vehicles, and providing lower-cost financing for the manufacturing industry and production. Edun, who sympathised with Nigerians for the current hardship, which he also noted will soon blow away, expressed optimism that inflation, despite being “quite sticky at the moment,” will decelerate and come down due to the government’s commitments and actions.

Edun said: “Clearly, as part of the reform program, on the monetary side, monetary policy has been tightened. CBN has been proactive in adjusting the monetary policy rate to address inflation head-on, which is in line with its legal mandate.”

Ajayi is the senior special assistant to the president on media and publicity