Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said that Nigeria’s target of reducing it’s inflation rate of 34.80 per cent in 2024 to 15 per cent in 2025 is achievable.
He stated this at the PwC & BusinessDay Executive Roundtable on Nigeria’s 2025 Budget and Economic Outlook with the theme: ‘Insights and Strategies for Navigating Nigeria’s Economic, Fiscal and Policy Landscape in 2025’, held in Lagos.
While listing the factors influencing inflation, he noted the structural reforms being implemented by the government.
“I hear people say 15 per cent inflation is not possible, but I disagree. If 2025 is as challenging as 2024, inflation will nominally drop to 25 per cent due to the base effect. However, I believe the reforms in place will limit key inflationary factors, paving the way for even lower rates,” Oyedele said.
He attributed the soaring inflation in 2024 to three main factors: exchange rate fluctuations, the removal of fuel subsidies, and high interest rates.
“Foreign exchange volatility was the biggest driver, with rates jumping from N900 to about N1,600 and even peaking at N1,900 at one point. Fuel subsidy removal and high non-performing loans also compounded the situation,” he stated.
The tax committee chairman noted that the outlook for 2025 appears more favourable. “These three major factors will have a limited impact in 2025, if at all.
“With the government’s commitment to not printing new money and implementing fiscal discipline, the inflationary pressures are expected to ease,” Oyedele added.
On oil production and revenue, he said that Nigeria’s production levels are gradually improving.
“We are currently at 1.8 million barrels per day, which is close to the target of two million. While I’m more concerned about oil prices than volume, the investments in the sector should bring some stability,” he noted.
While noting that some of the hardship faced by Nigerians was attributable to some of the ongoing reforms, Oyedele, however, said the reforms are necessary.
“For the first time, we’re allowing market forces to determine prices, which has brought transparency,” he said.
He also highlighted the government’s efforts to improve foreign exchange liquidity.
“We are taking significant pressure off the FX market. About $20m is saved daily, and with tax reforms, we expect an additional $4bn to be removed from the market annually,” he added.
He further called for optimism about the Naira, saying, “I don’t believe N1,500 is the fair value of the naira. It is undervalued, and as liquidity improves, we should see a recovery.”
