By Cross Udo, and Nathaniel Zacchaeus, Abuja
The Federal Government has increased the 2024 budget proposal from the initial N26trn to N27.5trn to meet the present economic realities.
The government has also revised the Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Papers, FSP, which initially had N700 per dollar as the exchange rate but is now N750 per dollar while the oil benchmark has also been reviewed from the initial $73 per barrel that was approved by the National Assembly to $77 per barrel.
This was disclosed by the Minister of Budget and Economic Planning, Atiku Bagudu while briefing State House correspondents at the end of the Federal Executive Council, FEC, meeting, presided over by President Bola Tinubu at the Council Chamber, Presidential Villa in Abuja.
The Minister said further details of the budget will be released when the president presents the budget to the National Assembly in a few days.
Bagudu said the MTEF and fiscal policy frameworks which have been passed by the National Assembly were further reviewed.
According to him, “This has the aggregate of N27.5trn which is an increase of over N1.5trn from the previously estimated using the old reference prices.
The Minister disclosed the forecast revenue for 2024 to be N18.2 trillion, explaining that it is higher than the 2023 revenue including that provided in the two supplementary budgets which the deficit is lower than that of 2023.
He said, “The Federal Executive Council considered the 2024 Appropriation Bill. The MTEF was earlier approved by the National Assembly. It has an exchange rate of N700 to a dollar and a crude oil benchmark of $73.
“To improve revenue, the council further reviewed the MTEF, with an exchange rate of N750 to a dollar, and a crude oil benchmark of $77. This will significantly improve revenue.”
Equally, the FEC approved the 2024 appropriation act and the presentation of such to the National Assembly by the President.
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*FEC approves support loan of $1bn from AfDB
Also briefing, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said that the Council approved $1bn budget support loan from the African Development Bank, AfDB.
He said, “There was a briefing by the Fiscal Policy and Tax Reform Committee, essentially they’ve been working for roughly 90 days, they’ve been working very well and very effectively, such that they are in a position to have even impacted the economy by coming up with initial reforms, as well as signposting the way forward the in terms of very important targets.
“So in a nutshell, the policy on VAT removal on diesel is from them, they are looking to help boost the fiscal situation of the government by increasing revenue, particularly tax revenue, through digitalisation, additional efficiency and rationalization of the range of taxes that we have at the moment.
“They are looking to increase the ratio of tax-revenue-to-GDP to 18 percent which is the average for Africa; so many countries are above that level. It is about double where we are now and within a matter of a few years, their target is to reach 18 per cent.
“Other economic measures, in the short term, are being contemplated and their report was well received by Mr. President and indeed, the whole Federal Executive Council.
“At the same time, I would like to give a summary of the memos that I had approved at Council today and of course, they were all to do with financing. First of all, there was an inherited financing, an inherited loan processing, which had to do with the $100m financing from the African Development Bank and $15m from the Canada-African Development Bank Climate Fund.
“Essentially, it was processed before this administration came in and, so it has been inherited. Essentially, it is concessional borrowing, around 4.2 per cent per annum by Abia State, through the federal government. So the funds are to be lent to Abia State and they are for waste management and rehabilitation of roads in Umuahia and Aba, in particular. That was approved.
“Secondly, there was the financing of $1bn, concessional financing, 25 years, and eight years moratorium at about the same 4.2 per cent per annum, which was approved by the African Development Bank for this administration.
“And really, it was in recognition of the macroeconomic measures that have been taken, the swift movement towards macro stability, restoring revenue, improving the foreign exchange situation, and so forth, that have been taken by this government. The reward, as far as the African Development Bank, a concessional financing organization, was to provide $1 billion in general budget support
“Finally, to keep working hard and maximizing the ability of the government to use the markets and to take advantage of different situations and improve situations, the Federal Executive Council approved a total limit of N2trn to be available for use by the Ministry of Finance to go in and out of the market and essentially to, where possible, bring down the rate of interest on the current outstanding.
“So essentially, it will be refinancing and the view is that there will be an opportunity to save about N50bn or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding.”
*President presents Appropriation to NASS tomorrow
Meanwhile, President Tinubu will tomorrow present the 2024 Appropriations bill to a joint session of the National Assembly.
Secretary of the Research and Information Department of the National Assembly, Ali Barde confirmed the development to journalists yesterday.
The Federal Government has proposed N27.5trn for the 2024 fiscal year.
The Appropriations bill will contain budget proposals for the 2024 fiscal year.
It will be the first budget President Tinubu will present to the National Assembly since he was inaugurated in May.
The presentation of the 2024 budget on Wednesday indicates that the Tinubu administration will maintain the January to December budget cycle initiated by former President Muhammadu Buhari.
The Federal Executive Council had yesterday approved the 2024 appropriation bill to be presented by President Tinubu.
The Council is the highest policy-forming body for the Federal Government and comprises ministers, the governor of the Central Bank of Nigeria (CBN), the national security adviser, and some top government officials, including permanent secretaries.
Communication on the budget presentation by President Tinubu to a joint session of the National Assembly must have been forwarded to both the President of the Senate, Godswill Akpabio, and Speaker of the House of Representatives, Tajudeen Abbas, which would, however, be read in plenary today.
Ahead of the budget presentation, President Tinubu had three weeks ago, forwarded to both chambers of the National Assembly, 20224 – 2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) where the sum of N26.1trn was proposed as total expenditure profile for 2024 fiscal year.
The Senate joint Committees which were coordinated by the Finance Panel Chairman, Senator Sani Musa, after two weeks of interactive sessions with heads of ministries, departments, and agencies on revenue and expenditure projections made for them, approved the MTEF-FSP.
It specifically, approved the N26.1trn proposed as 2024 budget and other parameters as proposed by President Tinubu.
It approved the new borrowings of N7.8trn, pegs benchmark oil price for 2024 at $73.96, and oil production volume per day at 1.78 million barrels.
Other parameters approved are a GDP growth rate of 3.76 per cent, an inflation rate of 21.40 per cent, a suggested benchmark exchange rate of N700 to $1, and a projected budget deficit of N9.04trn.
The report reads, “FGN recommended spending N26trn with N16.9trn as retained revenue. N9trn budget deficit (including GOEs), N7.8trn in new borrowings (including borrowing from foreign and domestic sources).
“N1.3trn worth of statutory transfers, an estimated N8.2trn in debt service, N234.6bn in the sinking fund, N1.27trn in pension, gratuity and retiree benefits. Total recurrent (non-debt) of N10.2trn and N4.49trn as capital expenditure.”
