Nigeria Can Cut Inflation to 15% in 2025,’ Says Fiscal Reform Chair
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Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has projected a significant decline in Nigeria’s inflation rate for 2025, forecasting a reduction from the 2024 average of 34.8% to as low as 15%.
Speaking at the PwC & BusinessDay Executive Roundtable on Nigeria’s 2025 Budget and Economic Outlook in Lagos on Thursday, Oyedele emphasised the government’s structural reforms and fiscal discipline as key drivers of this anticipated improvement.
“I hear people say 15% inflation is not possible, but I disagree. Even if 2025 is as challenging as 2024, inflation could nominally drop to 25% due to the base effect. However, I believe the reforms in place will limit key inflationary factors, paving the way for even lower rates,” he stated.
Oyedele attributed the record-high inflation in 2024 to three critical factors: exchange rate volatility, the removal of fuel subsidies, and elevated interest rates. “Foreign exchange fluctuations were the biggest driver, with rates jumping from N900 to about N1,600, peaking at N1,900 at one point. Combined with subsidy removal and rising non-performing loans, these factors pushed inflation higher,” he explained.
Despite the steep challenges, Oyedele suggested that 2025 would bring relief. “These three major factors will have a limited impact in 2025, if at all,” he said. He pointed to the government’s commitment to fiscal discipline and a policy of avoiding money-printing, both of which are expected to reduce inflationary pressures.
On oil production and revenues, Oyedele expressed cautious optimism, noting progress in Nigeria’s output. “We are currently at 1.8 million barrels per day, nearing the target of two million. While oil prices are a bigger concern than volume, ongoing investments in the sector should ensure some stability,” he remarked.
Addressing the economic pain felt by Nigerians, Oyedele acknowledged the tough realities of reforms such as subsidy removal and foreign exchange liberalisation. “It is honestly very painful what Nigerians are going through. But these measures were necessary. For the first time, we’re allowing market forces to determine prices, which has brought much-needed transparency,” he explained.
He also highlighted the government’s strides in improving foreign exchange liquidity. “By taking significant pressure off the FX market, we’re saving about $20m daily. With tax reforms, we expect an additional $4bn to be removed from the market annually,” Oyedele revealed.
Concluding his analysis, Oyedele expressed confidence in the long-term prospects for the naira. “I don’t believe N1,500 is the fair value of the naira. It is undervalued, and as liquidity improves, we should see a recovery,” he said.
Oyedele’s remarks provide a cautiously optimistic outlook for Nigeria’s economic trajectory, underscoring the need for patience and resilience as the country implements reforms to stabilise and recover its fiscal and monetary systems.
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