AMID dwindling revenue resources, the Federal Government’s N26 trillion proposed budget estimate for 2024 would largely be funded by borrowing,The ICIR findings have shown.
In the last five years, the government has been unable to meet up with 30 per cent cash backing for its budget, leading to several abandoned capital projects across the country.
Nigeria currently struggles to meet the Organisation of Petroleum Producing Countries (OPEC) 1.742 million barrels per day quota in oil production, with further concerns over its foreign exchange crisis, which makes the N26 trillion budget estimates an overtly ambitious one.
On October 16, Atiku Bagudu, the Minister of Planning and Budget, announced the N26 trillion budget proposal at the end of the Federal Executive Council (FEC) meeting in Abuja.
He also disclosed that the Council approved the 2024-2025 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Papers (FSP), adding that the Executive was required by the Fiscal Responsibility Act to present to the National Assembly ahead of a budget presentation, a document which would provide the medium-term economic outlook for the economy.
Key assumptions of the budget
Bagudu said FEC made assumptions about the reference price for crude oil, which is $73.96 per barrel and an exchange rate of N700. Oil production was projected at an estimate of 1.78 million barrels/per day. The gross domestic growth rate was projected at 3.76 per cent.
He said the proposal was presented on the backdrop of the measures taken since June to restore macroeconomic stability, particularly the deregulation of petroleum prices, largely predicated on subsidy removal and the regulation of the foreign exchange market.
“The Council members acknowledged the Medium-Term Expenditure Framework, and it was agreed that we can go ahead to the next step of consultation and presentation to the National Assembly.”
Major concerns about the projected N26 trillion budget
According to the budget estimates, the Federal Government plans to spend 61.63 per cent on personnel and debt service costs.
The personnel and pension costs of N7.78 trillion and the debt service cost of N8.25 trillion make up N16.03 trillion out of the N26.01 trillion 2024 budget.
The government would spend more on debt servicing than it would spend on paying the salaries and pensions of its workers.
Also, the amount budgeted for personnel and pension costs is expected to increase from N5.87 trillion in 2023 to N7.78 trillion in the 2024 budget.
This shows an increase of N1.91 trillion or 32.54 per cent amid concerns for a reduction in the cost of governance.
.An analysis of the budget estimates showed a 30.74 per cent increase in debt service cost from N6.31 trillion in 2023 to N8.2 5 trillion in 2024.
Economists express worry
Economists have raised concerns over the ballooning debt owed by the country and how it worsens Nigeria’s health economically.
For a professor of financial economics at the University of Lagos, Ndubisi Nwokoma, the N700/$ benchmark is neither here nor there because of Nigeria’s overwhelming currency problems.
“We’re not meeting up with our OPEC (oil) quota, and that is largely where our funding is benchmarked. The GDP projections of 3.7 per cent is overtly ambitious. What we are doing now is about 2.5 per cent. Where are we going to have the projected growth from, with how poorly we’re doing economically?
The Lead Partner, Centre for Social Justice (CSJ), Eze Onyekpere, an experienced budget analyst, expressed concerns over the budget estimates.
“N26 trillion is overtly ambitious because we have not been able to implement fully our budget size up to 30 to 40 per cent in the last five years.
He added, “We must tie our expenditure to what we can afford. We must tie our budget to what we learn, and not what we can borrow and keep raising the country’s debt profile.”
Another analyst, Chuka Mbonu, also expressed worry over huge personnel costs and debt servicing in the budget.
“Personnel costs and debt servicing are taking almost 63 per cent of the budget. These are consumptions; a paltry sum is left for infrastructure and economic stimulation. Our politicians must adopt austerity measures and not buy up jeeps from outside the country and export jobs.
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.