Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, declared on Thursday that the federal government surpassed its 2024 half-year non-oil revenue target by 30 per cent following the implementation of its economic reforms.
Edun disclosed that the government targeted a budget deficit of about four per cent in the fiscal year.
The minister made the assertions, when he briefed journalists in Abuja.
He provided insights into the economic situation in the country, disclosing that the federal government has exited the controversial Ways and Means trap after paying N7.3 trillion.
Assessing the impact of the reforms, Edun stated that Nigeria now stood at a strategic position globally to attract massive investments as a result of the government’s efforts.
He said, “I think we already can see macroeconomic stability. We have stable exchange rate. The budget deficits, as I will show, is reducing, the trade balance that measures how we are doing internationally is positive.
“The investment flows are positive, and there has been a root and branch reconfiguration of the finances of the federal government to achieve increased revenue across the board, as well as to achieve greater expenditure control.”
The minister also stated, “The pace of inflation is slowing. The goal target is to achieve food reducing inflation. The coordination between both fiscal and monetary policies are beginning to yield fruits. There will be reduction in food prices. As part of reforms, CBN has been tightening lending rate to rein in inflation and it’s achieving impact.
“Investment climate is improving both by the foreign and local investors. There is a growing confidence in the economy, driven by CBN action.
“Domestic capital market is upswing, resulting in improved returns on Investment.
“On the fiscal side, more than the 2023, both oil and non-oil revenue have improved largely due to resorting to the use of technology applications in the revenue drive.”
Edun stated that oil revenue was 30 per cent in the first quarter of 2024, compared to 11 per cent in 2023, adding that non-oil revenue in 2024 has been surpassed by 30 per cent, half-year.
He said, “We are moving to ramp up oil production. The target is two million barrels per day. The NNPCL has taken that challenge. In terms of tax reforms, there has been tax efficiency without an increase in tax to date.”
He explained that debt sustainability remained key to the government, adding that government has been honouring its obligations both domestically and externally without recourse to Ways and Means for funding.
The minister said, “We exited Ways and Means by paying N7.3 trillion obligations. Nigeria is in good position in terms of debt service to GDP from 97 per cent in 2023 to 68 per cent in 2024.
“The budget deficit is moving in the right direction. We are closer to a lower budget deficit than we met.”
According to him, debt is down in dollar terms, from $108 billion to $91 billion.
Amid allegations that the federal government was still paying subsidy on premium motor spirit (PMS), popularly known as petrol, after announcing the cessation of subsidies, Edun said subsidy was technically gone.
On whether the Federation Account received proceeds from the Nigerian National Petroleum Company Limited (NNPCL) since the government announced removal of fuel subsidy, the minister said, “Subsidy is gone technically. We do not have provisions for subsidy in the 2024 budget. What we have is a situation in which we have a combination of factors.
“The spike in the exchange rate as a result of the foreign exchange market reforms sent the exchange rate to the roof. It left NNPC in its role, by law, to ensure energy supply with fuel supply.
“We must remember that a resolution will come and while looking at the whole resolution of that situation, we must be reminded that as of today, an important factor is that the cost per litre of petrol in our neighbouring countries in West and Central Africa is three, four times of what it is here.”
The minister disclosed that there were impediments to the immediate compliance to the recent Supreme Court verdict that monthly federal allocations should now be paid directly into the accounts of local governments in the country.
In a case brought before it by the federal government against the states, the apex court had ruled that in line with constitutional provisions, federal allocations to the local councils should henceforth be paid directly to them, as opposed to the extant practice of paying into state/local government joint accounts in the 36 states of the federation.
Edun said part of the impediments was the fact that elections must be held to democratically elect local government administrations in the country.
But he assured that the impediments were being addressed, stating that President Bola Tinubu believes in fiscal federalism, and would adhere to the apex court’s ruling.
He said, “As far as the Supreme Court ruling is concerned, Mr. President is a democrat. He believes in federalism. He believes in fiscal federalism. What has come to pass now is a new fiscal regime where, through the State/Local Governments Joint Account, funding goes directly to the local governments.
“There is a committee of the Attorney-General and representatives of states and local governments within the conference of the Federation Account Allocation Committee that is looking at the practicality of moving to what the Supreme Court has said.
“There are practical impediments to the implementation and the governors have moved immediately to hold local government elections because the funds have to be released to elected governments.
“But also in practical terms, there was a FAAC meeting just last week, but it could not yet implement the judgement because the actual proceedings had not yet been handed down. It was not in the hands of the Attorney-General for him to start implementing.
“What is going to happen is that under a presidency that believes in the rule of law, the judgement on the local government is going to be faithfully implemented.”
The minister also disclosed that the federal government would float the much advertised $500 million dollar-denominated local bond in the next four weeks.
Edun said the bond would enable Nigerians to invest their funds locally in foreign-denominated currency.
He said, “We have an open exchange rate system, it’s not illegal and so we have the issuance of a dollar-denominated security, not depending on the financial architecture of the western world, not depending on the kind of architecture that you use to raise Eurobonds.
“We’re using the Nigerian financial system, the Securities and Exchange Commission (SEC), the banking system, the investment bankers to issue $500 million in the first instance that will be available and will attract foreign currency held by Nigerians abroad and anybody else who buys into the macroeconomic reform efforts of President Bola Tinubu.
“That issue is a challenge to the best and the brightest in the financial markets. It is due to open in the next three to four weeks, maximum.”
Edun clarified that there was no plan at the moment to float Eurobonds, saying doing so will be tied to the performance of the dollar-denominated local bonds.
He stated, “Right now, depending on the success of that issue, there is no talk of looking to go to the international markets to raise the Eurobond.
“It is one of the options that we have. The markets are open to us. Our ratings and our performance merit it.
“The market is open to us, but we prefer, in the first instance, to challenge Nigerians to come home with their money and be part of the Nigerian reform success story that we believe, that is where the economy is headed.”
Ndubuisi Francis
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