The Honourable Minister for Finance and the coordinating minister for the economy said in Washington yesterday that the federal government will pursue diversification of its revenues and adopt greater prudent resource allocation measures to mitigate the impact of low oil prices should it continue. The Minister spoke at a meeting with foreign investor that include representatives of JP Morgan, arguing that Nigeria is better positioned to deal with current global economic uncertainties on the back of the government recent reforms.
The Minister led the government delegation to the IMF / World Bank Spring Meeting that include the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso and the Director General of the Debt Management Office (DMO), Ms. Patience Oniha. The Minister outlined the government’s strategy to cope with lower oil prices, including prioritizing government expenditure, expanding non-oil exports, and optimising assets through public-private partnerships, says the government’s growth target is 7 percent, following the 3.8 percent recorded in 2024, the highest growth rate since 2014.
Nigeria’s brent crude oil traded for US $68 per barrel yesterday compared to the US $75 price benchmark for used for the 2025 budget. Oil price averaged US $80, US $77, and US $72 in January, February, and March this year. The fall in oil prices have followed recent uncertainty in the direction of the global economy and trade as demand for oil was expected to stagnate in the coming months. In relation to outlook, the US Energy Information Administration expects oil prices to average US $68 this year.
Oil revenues play a huge role in the Nigerian economy and there is real concern about the impact of the fall on both government revenues and the economy. In 2022, oil revenue contributed about 56 percent of the total revenue collected by the government, account for almost 90 percent of Nigeria’s foreign currency earnings. Following the recent decline in oil prices, Naira has depreciated against the US $ by 4.3 percent, from N1,537 to N1,604.
The Minister will seek to avoid grave policy errors of the past when federal government response to declining oil prices and revenues was dramatic increases in deficits, especially from the Central Bank of Nigeria, exacerbating inflation and the Naira’s weakness. Instead, the Minister emphasised that the priority of the government will be to ensure that government expenditure continues to meet the priorities of Nigerians, especially on critical infrastructure such as roads and power, and food security.
“Nigeria is diversifying its economy away from dependence on oil prices, and the extensive work on tax reforms is almost concluded, * Edun stated. *We will do all we can to create an enabling business environment, provide incentives, and implement structural reforms to attract private sector investment, drive growth, and generate revenue,* the Minister added. With a focus on prudent resource allocation and diversification, Nigeria is poised to navigate the challenges of low oil prices and achieve sustainable economic growth.
