Nigeria’s 2022 budget deficit could hit ₦7.4trn

Nigeria's plan to tap the domestic market could raise the country's budget deficit to ₦7.4 trillion if the new request by President Buhari is granted by Parliament. Tilewa Adebajo, the CEO of CFG Advisory, discussed the implications of this significant development in an exclusive interview with CNBC Africa. President Buhari has sought approval for an additional 965.4 billion Naira in borrowing from the domestic market to plug the budget deficit, which has now climbed to ₦7.4 trillion. Adebajo expressed concerns about the unsustainable fiscal situation in Nigeria, highlighting the increasing debt profile, excessive debt service payments, and the need for fiscal restructuring to address the challenges. Adebajo emphasized the importance of reducing subsidies, privatizing assets, and right-sizing government to improve fiscal sustainability. Despite some positive developments such as the shutdown of illegal refineries in the Niger Delta and an increase in Nigeria's OPEC quota, Adebajo noted that the revenue gains from these measures would be offset by the rising cost of subsidies, making fiscal restructuring imperative. With the National Assembly showing a tendency to approve the President's borrowing requests, the approval of additional borrowing remains uncertain. Adebajo urged the government to prioritize fiscal reforms to address the country's fiscal challenges and ensure long-term economic stability.