FG should set monthly achievement indices to 2024 Budget
Just a few days ago the Federal Executive Council (FEC) proposed the sum of N26.01 trillion for the 2024 fiscal year to be submitted to the National Assembly.
The Minister of Planning and Budget, Atiku Bagudu stated that the Council has given its approval for the 2024-2026 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Papers (FSP). These documents are crucial under the Fiscal Responsibility Act, as they provide a medium-term economic outlook for the nation ahead of the budget presentation.
During the presentation, the Minister outlined certain key assumptions considered in the budget proposal. The reference price for crude oil is set at $73.96, and an exchange rate of $700 has been factored into the budget.
Bagudu emphasised the positive steps taken since June to restore macroeconomic stability. He particularly highlighted the deregulation of petroleum prices and the elimination of subsidies, along with the regulation of the foreign exchange market.
The Minister further explained, “The Council deliberated on the implications of these measures, as well as the promises made in the Renewed Hope Agenda, which include consumer credits, mortgages, the restructuring or elimination of certain institutions, and funding for newly redefined ministries with specific functions aimed at generating growth for our nation.”
The prospects of Nigeria’s 2024 national budget recuperating the economy are precarious. Internal and external storms are getting stronger and lashing at the country’s fragile structures, while the government struggles to meet the daily demands of the populace it is clear that even the 2023 Budget by the last Administration, there are a lot of projects that are yet to be executed at the various Ministries Departments and Agencies (MDAs).
The Presidency has submitted the Medium Term Expenditure Framework (MTEF) to the national assembly for scrutiny and approval to guide the process for consideration of the 2024 budget.
With the submission, work is expected to commence on the document at the plenary of the two chambers on Tuesday after which it will be committed to the necessary committees for deliberation and later to the committee of the whole for its passage.
Upon its passage, the executive is expected to submit the 2024 budget envisaged to be N26.01 trillion to the National Assembly for consideration of what would be the first budget of President Bola Tinubu’s administration, laying out the fiscal policy of the regime.
Details from the government’s Medium Term Expenditure Framework and Fiscal Strategy Paper 2024-2026 indicate high recurrent and personnel obligations, amid modest revenue expectations. President Bola Tinubu and his team should exercise uncommon diligence in designing the budget.
The prevailing and wailing conditions compel a departure from the shoddy practices of the past two decades that have sharply reduced the potency of Nigeria’s national budgets to drive development. From its traditional format of being a forecast of government’s revenues and expenditures for a specific period,
The country’s national and sub-national government budgets fulfilled this role in practice; but in the Fourth Republic, the national budget has served mainly as legal authority to spend, driven by ‘transactions’ rather than stimulating production, infrastructure and jobs, or delivering social services to the citizens.
Though, we can’t rule out that the Tinubu’s government is confronted with several challenges due to lapses of previous Administrations. The economy is troubled, and poverty and hunger are spreading. High energy prices worsen the situation, resulting in record unemployment, hike in transportation and inflation. Labour unions are restive, and insecurity is rampantly an eyesore in every knocks and crannies of the nation. But he should as a Master strategist pull his head above the water.
The MTEF/FSP document indicates constraints to infrastructure and social spending in 2024 such as debt servicing, and personnel and pensions cost that combined, will drain a total of N16.03 trillion from the N26.01 trillion plan. Little is left for capital investment.
The published MTEF, the exchange rate was projected at $700 for 2024, $665.61 for 2025 and $669.79 for 2026. Although inflation has risen to 26.72 in September 2023, it was projected to be at 21.40 percent in 2024, 20.30 percent in 2025, and to drop to 18.60 percent in 2026.
Non-oil GDP is projected at N223,989.2 billion for 2024, N249,188.0 billion for 2025, and N278,251.7 billion for 2026 while Oil GDP (N’bn) was projected at N12,316.0 in 2024, N13,225.7 billion in 2025 and N14,272.0 billion in 2026.
In 2024, the FGN’s aggregate expenditure is estimated at N26.01 trillion including N2.73 trillion for GOEs’ expenditures and grants/donor-funded projects amounting to N639.92 billion. This is higher than the corresponding 2023 FGN aggregate expenditure estimate of N22.65 trillion (which includes the N819.54 billion supplementary provision) by 14.8 per cent (or about N3.36 trillion).
The 2024 expenditure estimate includes statutory transfers of N1.30 trillion and non-debt recurrent expenditure of N10.26 trillion (including N200 billion for the recurrent component of the Special Intervention Programme) while N8.25 trillion and N243 billion are for Debt Service and Sinking Fund to retire maturing bonds issued to local contractors/creditors, respectively, in the 2024 budgeted expenditure.
N6.78 trillion (inclusive of N1.02 trillion for GOEs) is provided for personnel and pension costs, an increase of N904.49 billion or 15 per cent over the 2023 provision, and 40 per cent of the projected aggregate revenues for 2024. The statutory transfer includes N114.80 billion (representing 1% of the consolidated revenue fund) earmarked for the Basic Health Care Provision Fund (BHCPF) and N117.67 billion for the North-East Development Commission (NEDC).
The N26.01 trillion 2024 budget is expected to be funded by the federal government revenue of N16.96 trillion (N5.91 trillion or 54 percent more than the 2023 Budget).
Of the aggregate revenue available to fund the 2024 Budget, N6.95 trillion or 41 percent is projected to come from oil-related sources and the balance of N10.01 trillion is to be earned from non-oil sources.
The FGN share of non-oil tax is projected at N3.52 trillion compared to N2.43 trillion in 2023, while its share of Minerals and Mining revenues is N4.56 billion in 2024 from N3.64 billion in 2023.
The projection for Independent Revenue is moderated to N1.91 trillion, down from N3.17 trillion, while the projection for Grants and Donor funded projects is N639.92 billion.
Further funding is expected from the N316.68 billion dividends from the Bank of Industry, Development Bank of Nigeria, Galaxy Backbone, and Bank of Agriculture while N736.04 billion is projected from the FGN’s share of Oil Price Royalty, Education Tax, Electronic Money Transfer Levy, and Drawdowns from Special Accounts.
However, the new Government of President Tinubu should set a time frame for monthly implementation of the 2024 budget when passed by the National Assembly, with visible achievements indices that the masses will directly benefit. We expect him to apply a different dynamic to the budget. Transparency and accountability should become the key indicators of this Government to help in not just reducing corruption but manage the resources available judiciously.
