Tilewa Adebajo has stressed the need to assess the 2024 budget’s performance and address significant revenue shortfalls for 2025.The CEO of CFG Advisory, Tilewa Adebajo, has raised critical questions about Nigeria’s 2025 budget, reiterating the need to assess the performance of the 2024 budget, address significant revenue shortfalls, and manage rising debt sustainably.Adebajo, in an interview with ARISE NEWS on Friday, stressed the importance of consolidating reforms and finding effective strategies to finance the nation’s growing fiscal deficits.
He added that there is a need to assess the performance of the 2024 budget before moving forward. “First of all, we need to understand the process to the budget. Despite the Fiscal Responsibility Act and the processes involved, such as submitting the Medium-Term Expenditure Framework (MTEF) to support the budget, we must first ask: what has been the performance of the 2024 budget?” he said.
He pointed out that Nigeria faced overlapping budgets in 2024, with a supplementary budget running concurrently with the primary one. “It’s time to consolidate all these budgets, close the previous ones, and focus on the new budget for 2025.
“We need to understand the impact of the reforms and gather this information from the Ministry of Budget and Planning,” he added.Reflecting on past projections, Adebajo noted inaccuracies in the 2024 MTEF. “For instance, last year’s framework projected an exchange rate of ₦700, but many of those projections for the next three years were far off target,” he said.
He also highlighted the persistent deficit issue: “As you can see, we had a deficit of ₦13 trillion from 2022, which carried over into 2024. This year, the deficit was projected at about ₦10 trillion, but with the supplementary budget, it’s now close to ₦18 trillion.”Adebajo noted the challenge of financing these deficits amid revenue shortfalls. “Traditionally, we have only been able to meet 65% to 70% of our revenue targets. There are serious challenges on the revenue side that remain unanswered,” he said.Discussing debt, Adebajo expressed concern over Nigeria’s growing domestic and external debt profiles. “In the last year, the domestic debt profile has moved from ₦50 trillion to about ₦70 trillion—an increase of nearly 50% of existing debt. On the foreign debt side, it has stabilised at about $41 billion, but with new borrowings, we might end 2024 at $45 billion,” he warned.
He also pointed out the implications for Nigeria’s credit rating. “Our credit rating remains at Caa1, although the outlook is positive. This means our bonds are non-investment grade, or ‘junk bonds,’ leading to double-digit interest rates of 9-13% on borrowings—an expensive burden in an era when global rates are being cut,” he explained.
Nigeria’s economy, according to Adebajo, remains in a state of stagflation. “We need to address petroleum pricing once and for all as it causes significant distortions in the economy,” he said. He also called for clarity on the Dangote refinery’s role in stabilising petroleum product prices.Discussing debt, Adebajo expressed concern over Nigeria’s growing domestic and external debt profiles. “In the last year, the domestic debt profile has moved from ₦50 trillion to about ₦70 trillion—an increase of nearly 50% of existing debt. On the foreign debt side, it has stabilised at about $41 billion, but with new borrowings, we might end 2024 at $45 billion,” he warned.
He also pointed out the implications for Nigeria’s credit rating. “Our credit rating remains at Caa1, although the outlook is positive. This means our bonds are non-investment grade, or ‘junk bonds,’ leading to double-digit interest rates of 9-13% on borrowings—an expensive burden in an era when global rates are being cut,” he explained.
Nigeria’s economy, according to Adebajo, remains in a state of stagflation. “We need to address petroleum pricing once and for all as it causes significant distortions in the economy,” he said. He also called for clarity on the Dangote refinery’s role in stabilising petroleum product prices.Adebajo acknowledged some progress in the foreign exchange market. “The foreign exchange seems to have stabilised, and we now have the NAFEM system. However, we need clarity from the Central Bank Governor on whether this system is the preferred one or if it has overtaken previous proposals,” he stated.
Adebajo raised concerns about government borrowing and revenue management. “The Finance Minister has discussed raising $2.2 billion in external debt, including $1.7 billion from Eurobonds and $500 million through Sukuk financing. However, the question remains: how do we apply these borrowings effectively?” he asked.
He criticised the federal government for crowding out the private sector in the financial market. “With a 50% Cash Reserve Ratio (CRR) and rising interest rates, the government dominates borrowing, starving the private sector of funding. This stifles growth for manufacturers and SMEs, contributing to the stagflation problem,” he explained.To address these issues, Adebajo proposed a return to the drawing board. “We need to sell assets and raise $50 billion to restructure the government’s balance sheet. This is the only way to achieve sustainability in public financing,” he suggested.
He also stressed the importance of activating financial oversight mechanisms. “The Fiscal Responsibility Act, the Debt Management Office, and Section 38 of the CBN Act are all financial circuit breakers designed to ensure fiscal discipline. Unfortunately, the Fiscal Responsibility Commission has not been vocal enough. This must change,” he stated.
Adebajo concluded by calling for transparency in federal accounts and oil revenue management. “The talk of increasing oil production to 1.8 million barrels per day must reflect in our reserves. A more transparent federal account operation system is essential to ensure oil revenues contribute meaningfully to national reserves,” he said.
