This year, there is a chance to achieve a sustainable economic growth rate that might increase output by 3.1%. However according to PwC, “balancing ambitious fiscal reforms” will be necessary, as stated in their yesterday-released Nigeria Economic Outlook 2024.
President Bola Ahmed Tinubu began implementing his economic reform plan even before he took on the responsibilities of government, beginning with eliminating gasoline subsidies. However, maintaining and expanding upon the audacious reforms is highlighted in the year’s economic forecasts from the World Bank, the International Monetary Fund (IMF), indigenous economic growth, and now PwC.
This year’s budget’s successful execution, according to the international accounting firm, is another crucial factor that will aid in the nation’s pursuit of sustainable growth. The degree to which this goal is reached will dictate the impact that the proposed reform will have on the economy.
The paper also emphasizes how crucial it is to coordinate monetary and fiscal policy to stabilize prices and accomplish short-term objectives.
“Nigeria’s aggressive income goals for 2024 mostly rely on oil prices and the execution of reforms. Historically, less than 70% of the entire budget has been realized in actual revenue on average. According to the research, “OPEC’s oil production quota, global oil prices, increased security in the oil-producing regions, and geopolitical factors will all play a role in achieving budgeted oil revenue in 2024.”
To reasonably succeed in achieving its price stability objective, it highlights the inadequacies of monetary tools in containing the skyrocketing inflation and states that the Central Bank of Nigeria (CBN) will need to “independently pursue inflation goals, emphasizing inflation control and maintaining a stable financial system.” It also emphasizes how crucial it is for monetary and fiscal authorities to work together more closely to meet the CBN’s 21.4% inflation objective.
According to this, “CBN consistency in communication, transparency in market operations, and clarity of policy will enhance stability to exchange rate price discovery and market activities.”
The company claims that because of ongoing economic difficulties, foreign portfolio investment (FPI) flows to the capital market might continue to be cautious. Due to delays in capital repatriation, downgrades from FTSE Russell and MSCI might potentially have a detrimental effect on the forecast.
However, it anticipates that the influx will increase the rate of growth in the manufacturing and information and communication technology (ICT) sectors. The estimate indicates that limited fiscal capacity for governmental investment and challenges attracting private investments are further economic restraints. It states that these will have an impact on the capacity to make the necessary infrastructure upgrades.
