Ongoing fiscal reforms by the Federal Government have led to a significant boost in revenue, with retained earnings rising by 60.88% year-on-year as of December 2024 compared to the same period in 2023.
This improvement was driven by increased contributions from both the oil and non-oil sectors, according to Muhammad Sani Abdullahi, a member of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC).
In a personal statement issued after the 299th MPC meeting, Abdullahi noted that oil revenue (FAAC receipts) grew by 12.09% year-on-year, while non-oil revenue also saw substantial gains due to improved tax collection and fiscal discipline.
Abdullahi noted, “Ongoing fiscal reforms have translated into improved revenue for the Federal Government. Thus, year-on-year, the government’s retained revenue improved by 60.88 per cent as of end-December 2024 compared with the corresponding period of 2023. Both the oil and non-oil sectors contributed to this improved revenue. Oil (FAAC) receipts increased by 12.09 per cent year-on-year.”
Expansionary 2025 Budget and Fiscal Risks
Despite the positive revenue performance, Abdullahi warned, “Given the expansionary budget of 54.9 trillion for the 2025 fiscal year, complementary measures will be required to effectively manage the potential fiscal risks as they materialize”
Key concerns include:
- Debt sustainability amid rising borrowing costs
- Revenue volatility due to fluctuating oil prices
- Inflationary pressures from increased government spending
MPC Holds Rates to Tackle Inflation, Ensure Stability
Abdullahi explained that his decision to vote for maintaining all monetary policy parameters was driven by the need to control inflation and ensure long-term economic stability.
“My decision to vote to maintain all policy parameters reflects my firm commitment to reducing inflation, ensuring price stability, and fostering long-term economic growth. This decision will require constant vigilance, given the current challenges and potential future risks that could significantly influence the direction of policy,” he said.
The MPC had retained the Monetary Policy Rate (MPR) at 27.50%, keeping a tight stance to curb inflation, which remains elevated despite recent moderation.
Balancing Growth and Stability
While fiscal reforms have strengthened government revenue, experts suggest that sustained economic growth will depend on:
- Efficient budget implementation to avoid wasteful spending
- Diversification efforts to reduce oil dependency
- Monetary-fiscal coordination to stabilize prices and support investment
In February 2025, at its 299th MPC meeting, the body voted to:
- Retain the MPR at 27.50 per cent.
- Retain the asymmetric corridor around the MPR at +500/-100 basis points.
- Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent.
- Retain the Liquidity Ratio at 30.00 per cent
