• Bismarck Rewane advised the federal government to ensure efficient spending and work towards improving local production
• The renowned economist slammed the overly ambitious inflation rate target as outlined in President Tinubu’s proposed budget.
• He, however, hinted at the likelihood of an increase in the inflation rate in December due to the festivities associated with this month.

Given the economic challenges currently facing Nigerians, it would be impractical for federal government aim for an inflation rate of 15% by the end of 2025.

According to Bismarck Rewane, eminent economist and managing director of Financial Derivative Company (FDC), this would not only be an ambition, but also too ambitious.

We would recall that Legitime.ng reported that the president Bola Tinubu would present the 2025 budget of N47.9 billion at the joint session of the National Assembly on Wednesday, December 18.

The 15% inflation rate objective is not achievable

Speaking in an interview on ChannelsTV’s Sunrise Daily, Rewane argued that the 15% inflation target set in the medium-term spending framework is too optimistic and unlikely to be achieved .

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He noted that even experts predict inflation to remain between 25% and 28% through the end of 2025.

He said:

“It is not a question of anticipating the presentation of the budget, but the inflation target of 15%, as we see in the medium-term spending framework, is too ambitious. I don’t think we’re going to get down to 15% inflation in the short term.

Even if inflation begins to moderate, by the end of 2025, most analysts estimate it will be between 25 and 28% at best. So the budget could be ambitious, it could be ambitious, but to be successful you have to be realistic, and I don’t think 15% inflation will be achieved.

Rewane described the projection of an exchange rate of N1,400/$ as more realistic than the N800 projected in the last budget, adding that a growth target of 3% to 4% would be achievable if the government guaranteed efficient spending in 2025 and improves local production.

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Rewane expects further increase in December

Rewane also commented on the recent statement BES inflation figuresnoting that they are consistent with previous forecasts.

He said:

“We are in an inflationary environment and this is the third consecutive monthly increase although the rate of increase is slowing. However, this means that the very idea of ​​inflation falling to 30% by the end of 2024 will not come to fruition.”

Rewane noted that the month of December usually sees a rise in prices of essential and non-essential goods due to festive activities, which is likely to lead to further growth in inflation. However, it forecasts an inflation rate of 32-33% by early 2025.

FG targets new loans in 2025

In the meantime, Legitime.ng had indicated earlier that the federal government expects to borrow in 2025 to finance the 2025 budget already approved by the FEC.

The 2025 budget amounts to N48 trillion and has a deficit of N13 trillion, which will be financed through borrowing.

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The federal government says the 2025 budget is designed to promote fiscal sustainability, focusing on balancing public spending and encouraging the private sector.

Source: Legit.ng