CAPITAL projects across Nigeria will suffer more as the Federal Government has projected 45 per cent of its N18.3 trillion expected revenue in 2024 to service debts.
The 2024 budget proposed an aggregate expenditure of N27.5 trillion for the Federal Government in 2024, of which the non-debt recurrent expenditure is N9.92 trillion naira, while debt service is projected to be N8.25 trillion naira and capital expenditure is N8.7 trillion.
By implications, capital projects would suffer more, leading to more abandoned projects, with the Minister of Works, Dave Umahi, recently alleging that President Bola Tinubu inherited N6 trillion debts in road projects, compounding the problem.
Tinubu, at the budget presentation on Wednesday, November 29, said the Federal Government would work towards reducing the rising debt.
For the 2024 budget estimates, the deficit is projected at N9.18 trillion in 2024 or 3.88 percent of gross domestic product (GDP). This is lower than the N13.78 trillion deficit recorded in 2023, representing 6.11 percent of GDP.
The President said the deficit budget would be financed by new borrowings totalling N7.83 trillion, N298.49 billion naira from privatisation proceeds, and N1.05 trillion drawdown on multilateral and bilateral loans secured for specific development projects.
He further said the national social safety net project would be expanded to provide targeted cash transfers to poor and vulnerable households.
Commenting on reforms, Tinubu said tax and fiscal policies would be reviewed to meet Nigeria’s revenue targets.
“Our target is to increase the ratio of revenue to GDP from less than 10 percent currently to 18 percent within the term of this administration,” he said.
Key Budget assumptions
The President noted that the world oil market and domestic conditions informed the government’s adoption of a conservative oil price benchmark of 77.96 US dollars per barrel and a daily oil production estimate of 1.78 million barrels per day.
“We have also adopted a naira to US dollar exchange rate of 750 naira per US Dollar for 2024,” he said.
He stressed that the economy was expected to grow by a minimum of 3.76 percent, above the forecast world average.
“Inflation is expected to moderate to 21.4 percent in 2024,” he added.
Concerns over economy
Amid dwindling revenue resources, the government struggles to meet its projected revenue.
Consequently, projected debt services could suffer setbacks as businesses continue to be squeezed by high inflation and Nigeria’s currency problems.
The budget presentation showed that an aggregate revenue of N11.045 trillion was projected to fund the 2023 budget of 24.82 trillion naira with a deficit of about 6.1 percent of GDP.
As of September 30, the Federal Government’s actual aggregate revenue inflow was N8.65 trillion, approximately 96 percent of the targeted N8.28 trillion naira.
Despite concerns of dwindling revenue, the Nigerian government will spend N9. 92 trillion on recurrent expenditure, servicing over bloated civil service at the expense of road and other capital projects that directly impact the economy.
Experts have argued that a bloated federal executive council of 48 cabinet members has become worrisome for an economy that borrows to fund a large chunk of its national budget.
“Should the government be that large at a time when a lean cabinet seems more needful given the financial state of the country?” a political economist, Segun Sowunmi said in response to Nigeria’s borrowings.
Also, the proposed budget estimates have raised concerns about the impact of the budget on the average Nigerian.
“Our budgets don’t have much impact on an average Nigerian. The economy is in trouble, and a large chunk of our borrowing is to service consumption of our over-bloated ministry, department, and agencies of government. We must learn from South- East Asia and adopt a budget that is developmental in nature and has a tangible impact on the common man,” a social critique and a professor of Law at the Baze University, Sam Amadi, told The ICIR.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.