In a bid to bolster the 2024 budget, Nigeria’s Minister of Finance and Coordinating Minister of Economy, Wale Edun, has indicated that the Federal Government may seek additional appropriations from the National Assembly if the country experiences robust revenue performance next year.
Edun made this announcement on Monday, during his appearance before the Senate Committee on Finance to defend his ministry’s budget.
The minister, who also disclosed that the 2023 supplementary budget would be executed concurrently with the 2024 budget, outlined the government’s strategy, stating that savings would be utilized to enhance the availability of funds for the 2024 budget. He said the budget would be increased to reflect the government’s commitment to addressing economic needs and priorities.
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The Senate Committee urged the finance minister to eliminate bottlenecks causing delays in budget implementation once passed. Chairman Sani Musa expressed concerns over the sluggish progress in executing the 2023 supplementary budget.
President Bola Tinubu presented the 2024 budget estimates of N27.5 trillion to the National Assembly on November 29, 2023. The budget breakdown included recurrent non-debt expenditure at N9.92 trillion, capital expenditure at N8.73 trillion, debt service at N8.25 trillion, revenue at N18.32 trillion, new borrowings at N7.83 trillion, and a deficit at N9.18 trillion.
The President projected economic growth at 3.76%, with an expected moderation of inflation to 21.4% in 2024.
Edun emphasized the importance of fiscal policy review and tax reforms to augment revenue generation. He assured that the government is not trying to increase, or introduce new taxes but enact reforms that will boost tax revenues.
He stressed that these measures would not only fortify the nation’s economy but also attract domestic and foreign direct investments, fostering job creation and wealth generation.
This development is coming amid growing criticism of the 2024 budget dubbed ‘Budget of Renewed Hope’ by experts, who believe it lacks the wits to address Nigeria’s current economic challenges.
Last week, Ben Akabueze, the Director-General of the Budget Office of the Federation, said that the proposed N27.5 trillion budget for 2024, awaiting approval in the National Assembly, is “too small” to adequately address Nigeria’s economic needs.
“I’m always first to acknowledge that the budget of the Federal Government of Nigeria is way too small relative to our needs and our requirements but it is now a case of cutting out coats according to our cloth rather than our size,” noted Akabueze.
Besides this concern, prominent Nigerians have expressed worry over the features of the budget, with some calling it extravagant. Peter Obi, the Labour Party presidential candidate in the last general election, said the priorities outlined in the budget fail to tackle the most pressing need of Nigerians, citing significant allocation for trips and renovations.
Obi urged a comprehensive review and revision of the budget to align with the urgent needs of the country.
BudgIT Foundation, a prominent civic-tech organization advocating for transparency, accountability, and efficient service delivery in Nigeria, has voiced apprehensions regarding the 2024 budget proposed by President Bola Tinubu and presented to the National Assembly for approval.
The organization said it identified what it deems as alarming issues and discrepancies within the 2024 budget, prompting a call for a thorough review of its contents.
“Unfortunately, having reviewed the proposed 2024 Appropriation Bill breakdown, we observed that the Bola Ahmed Tinubu administration has continued with some deleterious budget practices from previous regimes that have fostered corruption, underdevelopment, unemployment, and multidimensional poverty,” the foundation said.
The budget assumptions and Nigeria’s economic realities
Besides the backdrop of volume and features, the budget is significantly based on economic assumptions that experts fear may not be attained. For instance, the budget’s projections anticipate an average crude oil price of $73.96 per barrel in the global market and Nigeria’s oil production at an average of 1.78 million barrels per day, with an estimated exchange rate of N700/$1.
However, these forecasts contrast starkly with the current realities of underwhelming oil output, the weakening performance of the naira in the forex market, and a persistent upward trend in inflation.
Since 2022, Nigeria has struggled to maintain a daily oil production average of 1.2 million barrels per day. Achieving a significant daily increase of over 500,000 barrels within a year poses a considerable challenge, particularly considering the recent decline in oil production, illegal refining activities, oil theft, and a lack of confidence in the government’s capacity to reverse these detrimental economic trends.
Though there has been an uptick in oil production recently, with about 1.5mbd, the Nigerian National Petroleum Company Limited (NNPCL) said on Tuesday that Nigeria recorded 127 crude oil theft incidents between December 2 and 8, underscoring a possibility of production decline.
Also, the realities are stacking up against the N700/$1 exchange rate projection made in the budget. As of Tuesday, the naira is trading at N864.29/$1 at the official market and N1,210/$1 at the parallel market.
With the government’s efforts to boost dollar liquidity yet to yield the desired results, experts have called for the 2024 budget to be reviewed in line with the nation’s economic realities.
“We call for a comprehensive review that prioritizes broad-based economic growth, reduces inequality, addresses poverty, tackles insecurity, bridges Nigeria’s infrastructure gap, and invests in human capital development,” BudgIT said.