The Centre for the Study of Economies of Africa (CSEA), a research firm committed to evidence=based researches on Africa’s economic trends, has advised the Nigerian government to consider the option of reviewing the key parameters of the Medium-Term Fiscal Framework (MTFF) for 2022-2024 in view of historical and latest micro and macroeconomic realities in the nation’s economy.
The government had based MTFF’s framework on the following key parameters: crude oil price benchmark of $57 per barrel, crude oil production of 1.88 million barrel per day, exchange rate of N410.15/$, inflation rate of 13 percent and Gross Domestic Product (GDP) growth rate of 4.2 percent in 2022.
The framework further projects government’s budget to rise from N13.58 trillion in 2021 to N13.98 trillion in 2022 and revenue is to rise from N7.99 trillion to N8.36 trillion within the same period.
The MTFF is important in setting benchmarks for government spending in the medium-term which breeds accountability, transparency, and organization.
Despite the good fiscal intentions of the government on the MTFF, the research firm in its latest Nigeria Economic Update Issue No 127 sourced by our correspondent at the weekend, advised that historical precedents suggest that adhering to the medium-term framework is difficult owing to the use of overly optimistic parameters.
The CSEA stated: “In this case, an inflation rate of 13 percent can be considered optimistic given that the current inflation rate is 18%.
“Consequently, revising these parameters to reflect the current trends in the economy is critical to achieving the budget targets”, the report added.