Rewane outlines seven inevitable policy changes in 2024

Bismarck Rewane, managing director of Financial Derivatives Company Limited, has highlighted seven inevitable policy changes for Nigeria in 2024.

This was revealed at the 2024 economic outlook and budget analysis hosted by the Lagos Chamber of Commerce and Industry on Tuesday.

During his presentation, Rewane said debt rescheduling, interest rate increase, efficient management of money supply, efficient foreign exchange market, cost-reflective electricity tariff, petrol subsidy reduction and wage review are inevitable policy changes.

“Nigeria will also need to come to terms with its domestic and external debt situation,” he said, adding that Nigeria is expected to begin talks with the International Monetary Fund and reschedule its external debt.

The economic expert noted the need to question the impact of the country’s mounting debt pile on economic growth.

“As your debt is increasing, your GDP should be increasing. Therefore you are producing more, you are employing more people and you are investing more. What we have seen is a kind of stagnation in growth and an increase in debt; so it raises the question: what did you use your debt to fund? That’s a big question,” he added.

According to the World Bank, debt service costs gulped 96.3 percent of government revenue in 2022, up from 83.2 percent in the previous year.

As of September 2023, debt service was N5.66 trillion, representing 40 percent of aggregate expenditure and 64 percent of revenue, Atiku Bagudu, minister of budget and economic planning said while presenting the highlights of the 2024 budget proposal.

He said the debt service cost exceeded the budget by N1.68 trillion mainly due to interest on Ways and Means of N1.89 trillion and generally higher interest rates on borrowings.

Wale Edun, minister of finance and coordinating minister of the economy, said after the signing of the 2024 budget that the government would rely less on borrowing and more on revenue.

“We are bringing order to government borrowing, so ways and means are being eliminated by taking the funding that is required from the market, as opposed to from printing money by the central bank,” he said.

According to the Medium-Term Expenditure Framework report, projections for the 2024-2026 fiscal years reveal a continual arithmetic escalation in debt servicing, projecting figures to climb from 8.25 trillion in 2024 to 9.3 trillion in 2025 and further to 11.1 trillion in 2026.

Rewane said the goals for the 2024 budget are to achieve job-rich economic growth of 3.76 percent, inflation of 21.4 percent and fiscal deficit from N13.78 trillion to N9.18 trillion.

He said the probability for a minimum wage review is high, saying “likely increase in the minimum wage to N50,000 from N30,000.”