Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 27)

The Federal Government has approved the Medium-Term Fiscal Framework (MTFF) for 2022-2024. The framework is based on the following key parameters: crude oil price benchmark of $57 per barrel, crude oil production of 1.88 million barrel per day, exchange rate of N410.15/$, inflation rate of 13 percent and Gross Domestic Product (GDP) growth rate of 4.2 percent in 2022.1 The framework further projects federal government budget to rise from N13.58 trillion in 2021 to N13.98 trillion in 2022 and revenue is to rise from N7.99 trillion to N8.36 trillion within the same period. The MTFF is important in setting benchmarks for government spending in the medium-term which breeds accountability, transparency, and organization. However, historical precedents suggest that adhering to the medium-term framework is difficult owing to the use of overly optimistic parameters. In this case, an inflation rate of 13 percent can be considered optimistic given that the current inflation rate is 18%. Consequently, revising these parameters to reflect the current trends in the economy is critical to achieving the budget targets. 

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