President Bola Tinubu announced Nigeria’s intention to reduce its budget deficit to approximately 3.9% of the gross domestic product (GDP) in the coming year, a significant decrease from the current year’s 6.1%. The President anticipates this adjustment to be facilitated by a combination of reduced borrowing expenses and augmented revenues.
Tinubu has initiated the most substantial reforms in Nigeria in decades. These reforms, such as the removal of the widely-supported fuel subsidy in May and the elimination of foreign exchange controls, have contributed to a surge in inflation, reaching its highest levels in nearly two decades.
The administration is navigating the delicate task of mitigating the repercussions of double-digit inflation and the elimination of the fuel subsidy while concurrently maintaining fiscal discipline.
During his inaugural budget speech to lawmakers, President Tinubu forecasted an increase in government revenues through elevated oil production and enhanced tax collection. Additionally, he outlined plans for a modest reduction in borrowing by his administration in the upcoming year.
Industry analysts cautioned that the government’s revenue projections appeared ambitious. They underscored potential risks stemming from downward fluctuations in global oil prices and the production of crude, which stands as Nigeria’s predominant export.