Tinubu’s options for fixing Nigeria’s fiscal crisis are a banana peel

NAIRAMETRICS

Key Highlights

✔President-elect Asiwaju Bola Ahmed Tinubu will inherit Nigeria’s fiscal crisis, which includes a fiscal deficit of N8.17 trillion and a total public debt profile of over N67.5 trillion.

✔To address Nigeria’s fiscal crisis, Tinubu may consider removing fuel subsidies and increasing value-added tax (VAT) and other taxes. However, these measures may be unpopular, leading to protests and a decline in his popularity. 

✔Tinubu must explore alternative revenue sources such as increasing non-oil exports, diversifying the economy, and attracting foreign investment to address Nigeria’s fiscal crisis.

President-elect, Asiwaju Bola Ahmed Tinubu, faces numerous challenges as he prepares to take office, including Nigeria’s fiscal crisis. 

In its 2022 budget, the government projected a discal deficit of N8.17 trillion, which is equivalent to 45% of budgeted expenditure. To fund this budget, the government has been relying on local and foreign borrowing, which has pushed Nigeria’s total public debt profile to over N67.5 trillion.

One of the most critical issues Tinubu will have to address is the need to increase revenue and reduce the country’s fiscal deficit. The choices he has to fix the problem are available but they are also banana peel.