Nigeria sees inflation at 11.95pc by end-2021 from 14.89pc last year

ABUJA: Nigeria expects inflation to decline to 11.95% by end-2021 from an almost three-year high of 14.89% registered in November, Finance Minister Zainab Ahmed said on Tuesday, adding that the government will work on reducing food prices and the high cost of doing business.

She said inflation would still be above the government's single-digit target. Inflation has been in double digits for almost three years after climbing for the 15th straight month in November, lifted by higher food prices.

Nigeria is facing its worst economic crisis in 40 years, triggered by a coronavirus-induced crash in oil prices that has hammered state revenues, creating large financing needs and weakening the naira. That has made imports more expensive, adding to inflationary pressure.

"Inflation is expected to remain above the single-digit but we hope, working together with the monetary authorities, trade and finance, we can reduce inflation," Ahmed told a virtual conference discussing the 2021 budget.

Nigeria is planning for a budget deficit of 5.60 trillion naira or 3.93% of GDP, below the revised 2020 deficit of 6.15 trillion naira. The minister said the 2020 deficit had widened by 1.49 trillion naira due to additional funding required to tackle COVID-19.

Ahmed said the 2021 deficit would be largely funded by foreign and domestic borrowing. She said Nigeria would return to the eurobond market this year if conditions were right, having shelved eurobond issuance last year due to disruptions caused by coronavirus restrictions.

Nigeria has been talking to the World Bank about a $1.5 billion budget support loan. Ahmed said Nigeria was implementing some economic reforms requested by the Bank to enable it to approve the loan.