With Nigeria’s total debts already at N107.38 trillion following the approval of fresh borrowings for the Federal Government by the World Bank, renowned economist and Chief Executive Officer (CEO), Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has forecast that Nigeria’s total debt profile is expected to balloon to N144 trillion in the second half (H2) of the year.
Rewane, who dropped the hint during the Lagos Chamber of Commerce (LCCI) 2024 Mid-Year Economic Review and Outlook in Lagos, pointed out that the country’s economy was expected to struggle in the second half of the year, as the Federal Government battles macroeconomic challenges to stabilise the country’s Gross Domestic Product (GDP).
The FDC CEO disclosed to New Telegraph that the economy underperformed expectations during the first half of the year (H1’24), saying this was expected to be carried over to H2’24.
The renowned economist, while speaking on the H2’24 outlook, predicted that exchange rate would be traded between N1,550 and N1,650 range, economic growth averaging 3.4 per cent, inflation rate moderating to 28.7 per cent, oil production averaging 1.32 million barrels per day (mbpd), and oil price trending higher to $85 bpd by year end.
He also said that capital importation would moderate to $3.1 billion in H2’24 while fiscal deficit would remain elevated at 5.6 per cent of GDP.
Rewane, while highlighting that the country’s economy underperformed the expectations for H1’24, explained that oil production (1.3mbpd) remained below the national budget benchmark (1.7mbpd), economic growth in (2.98 per cent) and less than the government benchmark (3.76 per cent).
He said exchange rate depreciated massively by 34 per cent in H1’24 to N1,505/$, inflation remained untamed at a three-decade high of 34.18 per cent, adding that there were silver linings, giving a flicker of hope for H2’24.
According to him, oil prices averaging $83 per barrel in H1’24 will remain above $80 per barrel in H2’24, FAAC improvement to alleviate fiscal pressures, fiscal stabilisation fund of N2 trillion could stimulate growth, but 0.85 per cent of GDP is, no doubt, a drop in the ocean.
Rewane explained that for Nigeria’s GDP to grow by 3.3 per cent in 2024, naira would remain under pressure as the CBN has little firepower to defend the currency.
He said Nigeria was likely to request IMF policy support as financial pressures mount, adding that bank recapitalisation, orthodox monetary policy, clear exchange rate management system, elimination of subsidies, aggressive tax collection, and Nigeria’s debt burden would be exacerbated by high-interest rates in 2024.
Speaking further he disclosed that “GDP has to grow at least four per cent in the next three quarters to meet target.” On the growth composition, he said that exchange rate, as at December 2023, was N881.03, while in June 2024, N1,529.01. Inflation rate was 28.92 (December 2023), 34.19 (June 2024).
Deficit N9.19 trillion (December 2023), N14.27 trillion (June 2024). Debt service N8.28 trillion (December 2023), N2.45 trillion (Q1’24). GDP growth 3.46 per cent (Q4’23), 2.98 per cent (Q1’24).
Shedding light on the above analysis, Rewane disclosed that “exchange rate has depreciated by 83.75 per cent since December 2023. Headline inflation has increased by 18.22 per cent for the same period.”
New Telegraph
