15% Inflation Budget Projection Unrealistic; Inflation will be 25% in 2025 – Bismarck Rewane

Bismarck Rewane, CEO of Financial Derivatives Company, has expressed skepticism about the 2025 budget’s projection of a 15% inflation rate during an interview on Channels Television’s Sunrise Daily. He stated inflation is very unlikely to drop from the current 35% to 15% in one year given present economic conditions. He described the 15% inflation rate  target for 2025 as “unrealistic”.

Rewane projected that inflation would instead fall to around 25%, supported by policy measures like monetary supply restrictions, increased output, and exchange rate appreciation.

Rewane also pointed out that the oil benchmark of $75 a barrel might not be feasible, hence the benchmark for revenues (oil receipts which funds about 70% of the Nigerian budget) seems over-optimistic. He considers $70 a more realistic benchmark oil price.

Drivers of GDP Growth and Disinflation in 2025

Rewane emphasized that reforms in the electricity and telecommunications sectors could drive growth in 2025 and welcomed Dangote Refinery’s 7% fuel price cut as having the potential to cool inflation.

“We think that the inflation target of 15% proposed in the budget is not realistic. We think that inflation at this time next year will be more like 25% and 10% reduction in the inflation rate can be achieved through a combination of higher interest rates, an increase in output, and then a reform of the electricity sector.” Mr. Rewane said.

The economist cited other potential sources of economic growth and disinflation, “We also believe that for the Telco sector to drive growth, there has to be a liberalization of tariffs, and we think that the 7% reduction in the price of fuel announced by Dangote is great news”.

He noted that while the proposed 2025 budget projections were aggressive in certain areas, the budget was still realistic.

Nigeria’s $1 Trillion GDP Target 

Bismarck Rewane also spoke about the plan of the administration of President Bola Ahmed Tinubu to grow Nigeria’s GDP to $1 Trillion by 2030, “There is a disconnection between the vision of $1 trillion as the vision for 2030 and where we are at about $360 million. We would need to grow at about 40% a year. But our projection for growth is more like, base case, about 3.6%. The Government is expecting to grow at 4.6% in 2025. With some economic engineering, we might be able to get 5% to 6 %”

 

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