 A rise in food inflation in Nigeria has significantly impacted the economy and the purchasing power of consumers, mainly because food constitutes a significant portion of household budgets. The food inflation rate in September 2023 was 30.64% yearly, 7.3% point higher than the recorded rate in September of last year. This has led to a decline in the purchasing power of Nigerians, particularly low-income earners who find it difficult to afford basic necessities such as food, housing and health care. Here we have Muktah, Mohammed International Finance and Economic Analyst, a journey to look at the 2024 budget estimate and of course the inflation rate of the country. Muktah, thanks for staying with me. Let's start with inflation figures before we get into the budget and estimate. As food prices increase, consumers are forced to reduce expenditures on other essential items. Now this leaves them with less disposable income on other goods and services, reducing spending in the economy's non-food sectors. What did you really make of the latest inflation figures? I'm not surprised about the latest inflation figures. It's something that has been caused. I think we are beginning to see the effect of the removal of subsidy. We are beginning to see the effect of the high cost of diesel. We are also beginning to see the effect of the exchange rate volatility. So I was surprised about the type of inflation that we are seeing at the moment. It's something that is expected, but now we are basically trying to see how we can continue. But like I keep saying, continuing inflation will not have to deal with other countries of the world. Our own conditions are very peculiar and I think that all the CBNs will need to look into the multi-political committee and also the fiscal side will begin to come up with strategy on how to deal with inflation and pressures. Because when you look at the inflation and numbers, it shows that food items are due to high cost of transportation. The security challenge is to be there in some areas, the farmers are not able to go to farms. And then again you see those pressures. We are the people that have to deal with the exchange rate volatility also. So definitely I keep saying that for us to tackle inflation, especially for household items that we import into the country, we need to do one of the two. Either we provide them with effects or we reduce tariff. So that these goods will come down and in turn will bring down inflation. The rise in inflation has kept investment a real return negative affecting market participation and performance. Foreign market participation has declined, reflecting foreign investors' disinterest in the market and diversion to countries with positive real returns and less currency volatility like the United States. Do you see us bouncing back anytime soon? Well, bouncing back is something that will happen. But when we leave Apple, it's what nobody can really see at the moment because we are dealing with a lot of issues. In the era of foreign investors, they definitely want to come, but some of them already have their forms trapped here. So that is a major problem. The effects is still challenged. The reserves are not going. That's why they are implementing good oil production. So no investor wants to commit to the market as 1,000 or something like that. And then maybe you are exiting the market. They want to come at the lower rate and then we want to exit even at the lower rate. But at the same time, when you look at the official figure, when they want to come in, and if they want to do that and the parallel figure, they don't want to come in because the difference between the parallel and the official market is too wide. I think that's the greatest challenge we are having now. Until we begin to look at when we are reaching that gap, then we begin to attract foreign investors because then they will not know that the entry and exit will be streamlined because that means the equity is being met. Now to combat the soaring inflation, some have said that the central bank of Nigeria can employ monetary policy tightening measures such as raising interest rates and increasing reserve requirements for banks. Mokhtar, my question right now would be all of these proposals or propositions, are they still working or will it eventually work going forward? Because a lot of post-lations have been made concerning the monetary policy and fiscal policy measures and they seem not really working. If I get you, you are talking about the inflation targets of the international bank. Well, I think they know the challenge and I keep saying that the challenge is the exchange rate, volatility and supply constraint. So we shouldn't deal with our issues like the other parts of the world deal with our issues by just hiking rates and thinking that we'll solve it. But with Nigeria it's in more particular conditions. We are looking at microeconomy inflation, we are looking at demand and supply inflation, we are looking at supply chain inflation, we are looking at price volatility. And so all these are issues that we need to deal with with structural policies because when you look at the supply chain you are looking at the cost of production, production-induced inflation, especially with the lack of power for industries. So they have to sort for power themselves and when they have to do that they have to buy Gizu and Gizu prices at the same time, it's very high. So definitely when the federal government is targeting that, maybe they have other cushioning that they will need to do. And one of the major cushioning that they can do is to bring stability in the FX market that is the Monetary Policy Committee and issue all the monetary policy. They need to bring stability, they need to attract liquidity. Whether they are going to attract liquidity by borrowing liquidity or by attracting foreign direct investors or portfolio investors. As a standard, it's difficult for you to get the portfolio investors to come to Nigeria because of what I said initially in the cap. So they can achieve it, but I think it's going to be a nuclear tax because you are already doing inflation at about 27%. And we don't know where to end at the end of the year, but you could go as high as 30% to 32%. And if we do that, that means for them to achieve that inflation, then 21%, they may have to struggle to have to bring their inflation by almost 10%, which is a very, very difficult tax to do especially if you are not dealing with the structural issues that have to do with supply chain and then also the most important one, the instinctive volatility. Alright, now let's quickly get back to the proposed budget and what happened at FECA just recently. The revenue estimate of the budget is based on the assumption that the price of crude oil will average at $73.96 per barrel versus what we have at the 2023 budget, which is about $70. While our production will rise by 1.78 million barrels per day, what we have currently with the 2023 budget is 1.69 million barrels per day. Meanwhile, an exchange rate of $700 to the dollar has been earmarked as against what we budgeted for this year, which is $435.57. Okay, exchange rate at the I&E window was $848.12 to the dollar as of just two days ago, which means that the 2024 budget is expected to reverse the depreciation rate of the NARA. What do you really think? Are we likely to see an improvement in the country's fiscal position with all of these budget estimates that the FECA has proposed for 2024? I expected we flow the currency. We are looking at exchange rate of $700, which I think is very doable. Even yesterday, the I&E window, the market closed at $764, favorable to the other two days ago, like you said, and it closed at $848. So definitely we will see that convergence in the I&E window. Hopefully it will bring liquidity. My challenge with that window would be now that the 43-band item are going to be assessing that window. We will be able to meet up liquidity and then we have the forward liquidity to deal with, especially with the airlines companies. So if you look at that, what depends? I think it's achievable. Oil at $1.76, I think that's also achievable. If you know that we have moved from a low of about $900 million to about $1.69. So I think that even being more conservative by targeting it at that price, I think it could be better than that, which I think is very, very good one there. The benchmark of oil at the current at $72.7, for me it's fantastic. Hopefully the National Assembly will not do what they are not to do by increasing that rate to say, oh, the international price at today is at that, because the international price at the close of market was at about $92. And remember that in January, OPEC nations, especially Saudi Arabia, are planning to cut production. But Nigerians will still gain its own, because they were not able to meet their quota. So definitely that will end with more effects. And we must not forget that also the Israeli conflict with Palestine will also have an indirect effect on the market, just like the Russian-Ukraine crisis is doing now. So when you look at that and the price they affected, you will see they are very conservative, and I think for me that is a good move. All right. I don't know if I can quickly just achieve this one. And finally, I want you to just quickly, in 30 seconds, talk about the approval of the FEC on the World Bank loans of $1.5 billion, which calls for consensual financing. So that's what the Ministry of Finance is telling us now. Aside from that, we've also got an approval for $80 million loan by the AFD, which they say will help to fund the 2024 budget. Should we be worried with our borrowings right now, Moab Tao? Very quickly. No, we shouldn't be worried about the amount of effects that we can borrow to boost our liquidity. I think we should do it now. We should tie into the productive sector. They said on that budget 2024, which of these sector is this and what we're going to go into? That should be what we should be looking at. But as Moab, like I said, we need to borrow that to show our reserve. We also need to begin to do and treat, especially in the last and good oil trade, so that we can boost our reserve. So I think if any amount that we can borrow affects to boost our liquidity so that the exchange between people and our tracking testers is something I would support. Thank you so much, Moab Tao. That's as much as we can take on the show. My guest has been Moab Tao, International Finance and Economic Analyst, and we have been looking at the 2024 budget parameters. And of course, I'm the right-hand inflation that is plaguing the country many times once again. And that's the size of the show for today. My name is Justin Cadenia. We'll see you again next time. Bye for now.