The Federal Government of Nigeria has unveiled an ambitious plan to slash inflation from the current 34% to 15% by the end of 2025. This initiative, embedded in the Federal Government of Nigeria (FGN) Budget 2025, aims to tackle the structural and external factors driving inflation through coordinated fiscal and monetary policies.
A source within the Budget Office of the Federation, deeply involved in the 2025 budget preparations, disclosed four key strategies to achieve this target.
One of the cornerstone strategies focuses on improving national security to enable farmers to cultivate and transport their produce without fear. This measure aims to ensure a bumper harvest, reducing dependency on food imports and addressing the food segment’s significant influence on overall inflation.
The Central Bank of Nigeria (CBN) has long advocated for this approach, emphasizing agricultural security as a vital tool in combating inflation.
The government also plans to leverage increased domestic refining capacity to curb inflation. With the expected commencement of local production of refined petroleum products, the demand for foreign exchange (forex) for imports will decline.
“Beyond saving forex, the export of surplus refined products will boost foreign exchange earnings, further stabilizing the naira,” the source explained. A more stable naira will address inflationary pressures linked to currency depreciation.
Optimizing oil production and reducing upstream production costs are also key initiatives. The government aims to increase crude oil output while addressing pipeline vandalism and crude oil theft through advanced surveillance technologies such as drones and satellite monitoring.
Collaborating with host communities by providing developmental incentives will further secure oil installations and reduce disruptions. Additionally, investor-friendly policies, including competitive royalties and tax regimes, are expected to attract foreign and local investments in oil exploration and production.
The government plans to bolster macroeconomic stability to attract foreign portfolio investments. By implementing investor-friendly policies, it hopes to increase the supply of forex, easing exchange rate pressures, and lowering imported inflation.
The outlined measures highlight a synchronized effort between fiscal and monetary authorities to address inflation. The Central Bank of Nigeria has consistently called for fiscal interventions to complement its monetary policies, a recommendation that now appears to be gaining traction.
The FGN Budget 2025 presents a comprehensive roadmap for economic stabilization and growth. If implemented effectively, the strategies could significantly alleviate the rising cost of living and boost Nigeria’s economic prospects.
The source emphasized that achieving the inflation reduction target would require sustained commitment to these reforms and robust monitoring mechanisms to ensure success.
