By Chinwendu Obienyi
For Nigeria to experience a decent outing, there has to be a successful implementation of the 2022 budget, creating investment opportunities, broadening of the tax base and deliberate policy engagements and incentives.
Furthermore, it is believed that the elimination of subsidies and a lower exchange rate will free up funds for all tiers of government while pre-election spending is expected to increase money supply in 2022.
The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, stated this during the 2022 Nigerian Economic Outlook organized by First Bank in Lagos yesterday. Rewane, while scoring Nigeria’s performance at 40 per cent in 2021, said the economy did not perform better in 2021 due to the failure of the nation’s Economic Recovery and Growth Plan (ERGP).
He said although Nigeria spent a lot last year, there was no much impact on its economy, adding that the money spent came from borrowings as well as taxes.
“There was a projected revenue of N7.99 trillion but we ended 2021 with N3.06 trillion and that is because our revenue is still largely oil dependent. We must remember that the elections are coming and so the onus is on the FG to do something fast as regards our debt. Our total debt is currently $6.23 billion, domestic debt is up by $1.62 billion, this means our borrowings have continually gone up and yet we have not seen the much desired impact in our economy”, Rewane said.
Whilst listing factors such as inflation, oil price, oil production, gross external reserves, average GDP growth and the Naira that defined Nigeria’s performance in 2021, the economic analyst, said, the year will be a year of two halves as there will be economic reforms in H1 2022 and politics in H1 2022.
“Oil price is expected to average $70-85 per barrel, pre-election spending should drive up cash in circulation and the Central Bank of Nigeria (CBN) is likely to increase forex supply to manufacturers while economic performance will be largely determined by the successful implementation of the 2022 budget. Inflationary pressures will intensify for 2-3 months before abating if it coincides with the increase in FX supply.
We also expect the CBN to deplete reserves to maintain exchange rate stability and this is what I have said time and time again that the apex bank needs to step up efforts towards exchange rate convergence. The government might decide to go to the Eurobond market and there is likely going to be currency devaluation and monetary policy tightening,’’he said.