Amidst major economic reforms being undertaken by the present federal government, Nigeria’s public debt is projected to hit N70 trillion while inflationary pressures are expected to be sustained through second half of 2023, H2’23.
However, the Gross Domestic Product, GDP, is expected to improve marginally at 2.94 percent.
Giving details at a webinar yesterday analysts at Meristem Securities Limited, a Lagos based investment house, hinged the rise in public debt portfolio in H2’23 to, among other circumstances, the securitization of the N22 trillion ways and means balances.
The projected 2.94 percent GDP improvement was hinged on increased activities in non-oil sector and increased oil production due to new administration’s policies.
The sustained inflationary pressure was based on the sustained rise in Monetary Policy Rate, MPR.
Presenting the Macro economic outlook for H2’23 at the webinar themed: “Tough start, bumpy road, propitious end”, aimed to provide guidance on strategies for investment positioning for H2’23, Investment Research Analyst at Meristem, Mr. Sodiq Safiriyu, said: “When we are looking at the fiscal policy, we talked about the revenue base as well as the debt structure or the debt stock of the country. We see that these are still increasing for a while now even in H1’23 we see our debt stock rise to an unprecedented level and we still expect this to go higher amidst the securitized ways and means that will accumulate the debt stock and will make it rise over N70 trillion.
“Again, our expectation is that while the government continues to implement important reforms to increase its revenue base, to try to finance its promises, through borrowings so we expect the debt stock to continue to trend upwards.”
On GDP growth he said: “What we expect in H2’23 is that the GDP growth will be higher and this hinges on the improvement in business activities in the non oil sector. As well we expect that policies from the administration of President Bola Ahmed Tinubu will help to increase oil production volume during the period.
“Cumulatively, we have revised our 2023 GDP forecast upward to 2.94 percent (from an initial estimate of 2.7 percent). As I said earlier, this is lower than what was recorded in 2022.”
Safariyu noted that inflation is expected to remain elevated due to higher food prices and for this reason the Monetary Policy Committee, MPC will raise rates by 100 basis points.
“For us, we expect that the MPC will still hike rates but at this point it will be less aggressive from what we experienced in the half part of the year. “For the end of 2023 our forecast for the naira for the year to end date is between N779 to N786 per dollar.”
SOURCE: PUNCH
