Skip to player
Skip to main content
Skip to footer
Search
Connect
Watch fullscreen
Like
Comments
Bookmark
Share
Add to Playlist
Report
Nigeria’s President to present 2025 budget proposal to parliament today
Guardian Nigeria
Follow
12/18/2024
Category
🗞
News
Transcript
Display full video transcript
00:00
Now, Maidra's President Bolatununbu will present the proposed $47.96 trillion Naira
00:05
budget to the Joint National Assembly today, following final adjustments to the proposal.
00:10
Meanwhile, the Senate has also passed for first read and a bill to ban the use of foreign
00:15
currencies for payments and transactions within the country.
00:18
Johnson Chukwu, the Chief Executive Officer of Kauri Asset Management, joins me now for more
00:22
on these discussions.
00:24
Thanks a lot for joining us on the show today, Mr Chukwu.
00:26
Now, let's talk about your take on the parameters.
00:29
Looking at the 2025 budget proposal, we have the last minute adjustments being made between
00:34
yesterday and now for you.
00:36
Looking at the parameters and the size of the budget.
00:39
In dollar terms, this does not necessarily look bigger, but when we calculate in Naira
00:43
terms, this is a much more voluminous size from what you saw in 2024.
00:48
But let's talk about Naira's exposure to all volatility and the size of the budget
00:53
not necessarily correlated to the sort of recovery we should expect next year.
00:59
Yes.
01:00
Once again, thank you, David, for having me.
01:02
Looking at the budget assumptions, which are the basic questions we are asking,
01:06
and how realistic are those assumptions?
01:08
I think some of the basic assumptions underlying the budget and expenditure are quite optimistic,
01:15
starting from the crude oil production averaging about 2.06 million barrels a day.
01:20
We know we are not anywhere close to that.
01:22
As such, budgeted crude production will amount to almost 25% increase beyond where we are
01:29
today.
01:30
And I do not imagine the kind of transformation we're going to have in the security architecture
01:34
around the Niger Delta regions in terms of relationship with the communities.
01:40
That could lead, and in terms of new investments in exploration and production, that will lead
01:45
to an increase of more than 25% of current crude production.
01:49
Average crude production in the third quarter of this year was 1.47 million barrels a day.
01:55
An improvement, an imaginary improvement from the 1.45 million barrels we had in the same
02:01
period as third quarter last year, and 1.41 million barrels we recorded in the second
02:06
quarter of this year.
02:06
So in any case, we are still in the 1.4, less than 1.5 million barrels a day.
02:13
So if you are planning 2.06 million barrels a day, you are talking about 256,000 additional
02:20
barrels daily.
02:21
That for me is quite optimistic.
02:23
Second aspect we have to look at is the budget, crude oil benchmark of $75 per barrel.
02:29
Today, we know that Donald Trump, the new president-elect of America, was sworn in in
02:35
January, and we know Donald Trump does not believe so much in climate change, ozone layer
02:42
and depletion.
02:44
We know clearly that Donald Trump is going to push for increased American crude production.
02:50
Donald Trump is likely going to work with Saudi Arabia to disrupt the OPEC-plus alliance
02:56
that had kept crude price artificially high.
02:58
So if those are the expectations in the world, we should expect that crude price will trade
03:03
below $75 per barrel.
03:05
And this year, it had largely traded below $75 per barrel.
03:11
So these key assumptions could mess up the entire revenue projections, which also flows
03:17
to what follows from that is that the budgeted deficit of $10.8 trillion may be exceeded,
03:24
and that could lead to some distortion in the macroeconomic environment.
03:28
And talking about the sort of market distortions and the outlook now, let's look at how global
03:34
dynamics continue to filter into the Nigerian market.
03:37
We're definitely expecting the US Federal Reserve to combine interest rate cut with
03:42
some hawkish 2025 outlook.
03:44
Now, in Nigeria's fight against inflation, we still have to look at the budget size for
03:49
2025, the money supply growth we've had so far, and whether or not we still have that
03:54
great complementarity on the back of the fiscal and monetary mix here to counter this.
03:59
When you're looking at the drivers of inflation here in the country, it's not just one size
04:05
fits all or one team taking an upper hand.
04:08
We're yet to get that right mix.
04:10
For you now, do you think Nigeria can stem the tide going forward into 2025 and your
04:15
projections from that?
04:16
Because the CBN was looking at about a rate of 21.4% for this year, but that's clearly
04:21
way out of the pack for us right now.
04:26
David, the challenge we have, the factors that are driving inflation in the country
04:29
are yet to be addressed.
04:31
There are two major factors driving inflationary pressure in the country.
04:36
One is insecurity in the major food banks of the country that has led to a reduction
04:40
in food production.
04:41
If you look at agricultural GDP, agricultural GDP grew at 1.14% in Q3 2024.
04:49
That's symptomatic of the problem we're having, despite all the investment of funding
04:54
going into agricultural sector.
04:56
Without a substantial improvement in agricultural production, you're going to see consistent
05:01
high food inflation.
05:04
And food inflation will flush into the all-time inflation.
05:07
Look at the food inflation for the month of November.
05:09
It came at a print of 39.93%.
05:13
And that is what drove up overall inflation to 34.6%.
05:18
And I do not see any material change in that dynamics.
05:24
For us to address the issue of inflation in the country, we need to address the issue
05:27
of one, food production, so that we can have reduction in food inflation.
05:31
And we also need to address the issue of crude production to a much higher volume, so that
05:36
we can increase our earnings from our printing activities, earnings from crude oil exports,
05:42
which will help us stabilize the exchange rate and possibly see an appreciation of the
05:46
exchange rate.
05:46
A lot of the factors we are facing today is the path to effect of narrow devaluation or
05:51
depreciation, as well as the impact of slow food production.
06:00
We address them.
06:01
Next year, we're going to struggle to achieve the target inflation figure that was indicated
06:07
in the budget projections.
06:09
And lastly now, Mr. Chukwu, talking about inflation targeting as well.
06:12
Now, I'd like your take on the CBN strategy here.
06:15
For so many, they've said clarity is what's missing so far in the inflation targeting
06:20
strategy for Nigeria.
06:22
But let's take a look at Fitch as well, which is expecting the CBN to begin monetary
06:26
easing by the second meeting of the year.
06:28
So that puts us at about a range of March.
06:31
Do you think we might likely see the easing cycle begin from there?
06:37
Well, David, if we are looking at the variables today and the outlook on the economy, I think
06:42
it would be optimistic for anybody to expect easing will start in the second half of the
06:46
year.
06:47
Like I said, we're likely going to continue to experience inflationary pressure.
06:50
I'd actually predicted that the reversals or the reduction in rate of inflation at which
06:59
of the economy in July and August was going to reverse.
07:03
Because once we move away from the harvest season and move to planting season, I remember
07:07
we're moving to planting season.
07:09
So the only time you begin to see a reversal in food inflation would be in the harvest
07:12
season sometime in July next year.
07:16
But it's also going to be short-lived unless we address the other factors, which is increasing
07:20
food production.
07:21
The people in the farming beds must go back to their farm and produce.
07:25
The Central Bank is actually dealing with a very difficult situation.
07:30
Central Bank and the DMO had withdrawn from the economy over 30 trillion Naira since the
07:34
beginning of this year, all in the bid to fight inflation.
07:37
While that was going on, the FARC had injected about 14 trillion into the economy, counterbalancing
07:42
for the monetary authorities.
07:44
And of that 14 trillion, about over 5 trillion, about 38 percent was what you call exchange
07:50
gain or exchange differential, which you could actually say is not backed by dollar reserve.
07:56
So these are factors that actually seem to be shifting the effort of the monetary authorities.
08:02
So I think in the coming year, we expect that the economic management team of the government,
08:08
which comprise of the fiscal and the monetary arm of government, should sit down together
08:13
and ensure there's a lot more harmony in terms of liquidity injected into the economy,
08:19
and as well addressing those issues that are constraining food production as well as food
08:26
production.
08:26
Definitely.
08:27
We'll have to leave the conversation here for now.
08:28
Thank you so much for your time and the show today.
08:30
That was Johnson Shuka, the Chief Executive Officer of Kauri Asset Management.
Recommended
9:07
|
Up next
2025 budget: Nigeria plans spending on critical infrastructure projects
Guardian Nigeria
2/17/2025
1:41
US President Trump promises to send ventilators to Nigeria
Guardian Nigeria
4/29/2020
3:12
Nigerians' reminisce about 2022
Guardian Nigeria
12/23/2022
2:19
Trends that shaped Nigeria in 2022
Guardian Nigeria
12/23/2022
2:58
'We are working to make sure Nigeria continues to be peaceful' - Nigerian Army
Guardian Nigeria
5/17/2025
0:52
Nigeria's ruling party candidate, Bola Tinubu declared president after disputed election
inews
3/1/2023
0:54
Nigeria moves to domesticate UN Security Council resolution
Guardian Nigeria
8/30/2019
8:29
Nigerians speak on Nigeria at 62
Guardian Nigeria
10/2/2022
0:55
Nigeria to spend $1.2b on agricultural mechanization
Guardian Nigeria
5/17/2020
37:38
Opposition Leader Anthony Albanese delivers the 2022-2023 Budget reply | March 31, 2022 | The Canberra Times
The Canberra Times
3/31/2022
2:12
President Buhari restates commitment to securing Nigeria during visit to Imo State and more
Guardian Nigeria
9/9/2021
0:32
Nigeria's Democratic Milestones: 25 years long and Five Presidents after
Guardian Nigeria
6/12/2024
2:27
Made in Nigeria helicopter: President Buhari non-commercial operations in quarter 2021
Guardian Nigeria
1/26/2021
8:38
VIDEO |AFCON 2025 Qualifiers Highlights: Nigeria vs Libya
beIN SPORTS USA
10/11/2024
4:12
Budget 2025: Massive Protests Erupt as FM Sitharaman Presents Budget, Opposition Raises Kumbh Death
Oneindia
2/1/2025
12:20
Nigeria's Foreign Minister speaks to BRICS partnership
Guardian Nigeria
1/27/2025
6:43
Nigeria needs to improve trade relations with the U.S
Guardian Nigeria
3/24/2025
2:12
ACT Chief Minister Andrew announces funding budget 2025-26
The Canberra Times
6/13/2025
1:51
'Fiscal decentralization will move Nigeria forward' - Akinwumi Adesina
Guardian Nigeria
12/8/2023
7:46
Nigeria’s FDI falls to $29.8mn in H1’24
Guardian Nigeria
10/10/2024
0:45
Nigerian author Chimamanda Adichie says bride price should be abolished (video) ▷ Nigeria news NAI
Information Nigeria
9/26/2018
13:12
House committee hearing for OVP 2022 budget
rapplerdotcom
9/10/2021
3:06
C.A.N demands for peace in Nigeria
Guardian Nigeria
2/3/2020
12:46
The Big Stories || Nigeria Election: Bola Tinubu is Nigeria's President Elect ||
The Multimedia group
3/1/2023
3:24
Budget 2025: Nirmala Sitharaman Poses Outside Finance Ministry Ahead of Budget Speech
Oneindia
2/1/2025