Repositioning the economy, what the numbers are saying

By Temitope Ajayi

On Thursday in Abuja, Minister of Finance Mr. Wale Edun addressed a press conference, providing a mid-year report on the economy.

The Minister outlined the measures President Tinubu’s administration has taken over the past year to address structural imbalances, working closely with fiscal and monetary authorities.

The Minister, who will now hold quarterly media briefings 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.

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

Mr. Edun attributed the positive economic performance 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 that of the corresponding period in 2023. He credited this growth to the reconfiguration and improvement in government finances, with oil revenue as a percentage of gross revenue increasing from 11 percent in the first half of 2023 to 30 percent in the first half of 2024.

Here are the numbers as presented by the Minister:

1. Non-Oil Revenue: The government’s determination to mobilize non-oil revenue has consistently delivered impressive results. For the first half of 2024, non-oil revenue not only surpassed that of the first half of 2023 but was also 30 percent above the 2024 budget target without any tax increases.
2. National Debt Burden: The Tinubu administration, according to the Minister, has been working to manage and reduce the national debt to create better fiscal headroom for economic management. In dollar terms, 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 past year, the administration has exited the Ways and Means debt trap due to better fiscal management. Under President Tinubu’s leadership, the Federal Government has not relied on borrowing from the CBN Ways and Means to fund its obligations. Edun noted that part of the current inflationary pressure was due to past abuses 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: The Federal Government of Nigeria has historically spent more than half of its revenue on debt servicing. By the end of June 2023, this figure was 97 percent. Over the past year, the debt service-to-revenue ratio has improved, declining 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: Reducing the budget deficit has been a major priority. Over the past year, the Tinubu administration improved revenue collection and blocked many leakages. Mr. Edun noted that the 2024 budget deficit target is 4.1 percent of GDP, an improvement from the 6.1 percent deficit recorded in 2023. “On an annualized basis, we are at 4.4 percent, 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 foreign inflows into the economy continue to yield positive outcomes. The minister highlighted ongoing reforms and improvements to the business environment to further boost confidence. Mr. Edun underscored the government’s efforts to attract foreign inflows, including implementing the national single window project, which is expected to generate $2.7 billion annually in economic benefits. He added that the government’s accelerated stabilization 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, the Minister highlighted several initiatives and interventions, including a strategic input program to increase food supply, a pivot to Compressed Natural Gas (CNG) fuel for mass transit vehicles, and providing lower-cost financing for the manufacturing industry and production.
   
   Mr. Edun, who sympathized with Nigerians for the current hardship, expressed optimism that inflation, despite being “quite sticky at the moment,” will decelerate due to the government’s commitments and actions.
   
   “Clearly, as part of the reform program, on the monetary side, monetary policy has been tightened. The CBN has been proactive in adjusting the monetary policy rate to address inflation head-on, which is in line with its legal mandate,” Mr. Edun said.