The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has expressed optimism about Nigeria’s inflation outlook for 2025, believing the country can lower the inflation rate from an average of 34.80 percent in 2024 to 15 percent.
Oyedele made this statement 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’, on Thursday in Lagos.
He highlighted the key factors driving inflation and emphasized the structural reforms the government is putting in place to address the issue.
“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.
Oyedele linked the surge in inflation in 2024 to three primary factors: exchange rate fluctuations, the removal of fuel subsidies, and elevated 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 explained.
Despite these challenges, Oyedele noted that the outlook for 2025 appears more favourable.
“These three major factors will have a limited impact in 2025, if at all,” he said.
“With the government’s commitment to not printing new money and implementing fiscal discipline, the inflationary pressures are expected to ease.”
On oil production and revenue, Oyedele noted 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 focused on oil prices than volume, the investments in the sector should help bring some stability,” he remarked.
Regarding the hardship faced by Nigerians, Oyedele acknowledged the difficulties caused by the ongoing reforms.
“It is honestly very painful what Nigerians are going through. The removal of subsidies and FX reforms have been tough, but they were necessary. For the first time, we’re allowing market forces to determine prices, which has brought transparency,” he said.
Oyedele also emphasized the government’s efforts to enhance 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 noted.
