The Federal Executive Council (FEC) yesterday endorsed a N27.5 trillion total expenditure for 2024, continuing the trend of ambitious appropriation benchmarks amid fiscal challenges. This move sets the stage for President Bola Tinubu to present the budget to the National Assembly tomorrow.
Tinubu Faces Fiscal Constraints
The 2024 – 2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), already passed by the parliament, paves the way for swift legislative approval. However, the proposed budget raises questions about Nigeria’s fiscal direction, with provisions that deviate from prior administration promises and official statements.
Debt Financing and Growth Ambitions at Odds
Finance Minister Wale Edun previously pledged to avoid debt financing, yet the MTEF indicates plans to borrow over N9 trillion to fund the budget. This approach faces challenges from the Central Bank of Nigeria’s (CBN) policy shifts and the high cost of local borrowing, raising concerns about the feasibility of such fiscal strategies.
Economic Growth Projections Fall Short
The proposed spending is significantly lower than what is required to achieve President Tinubu’s ambitious $1 trillion economy target. Despite Nigeria’s past economic peak, the MTEF caps growth projection at 4.78 percent, falling short of the President’s campaign promise of a six percent average growth rate.
Budget Comparisons Highlight Shortfalls
The N27.5 trillion budget amounts to a per capita spending of approximately N127,000, or about $150. This figure pales in comparison to South Africa’s $2400 and Egypt’s $1500 per capita budget. Economist Prof. Bongo Adi criticizes the budget for its insufficient allocation, arguing for a tenfold increase to meet the country’s growth potential.
Revising Revenue Benchmarks and Production Targets
The 2024 budget maintains optimistic oil production benchmarks, aiming for an average of 1.8 million barrels per day (mbpd) over the next three years. This target, however, seems unanchored in market realities, as recent production levels have averaged 1.57 mbpd.
Tinubu to Address National Assembly
President Tinubu is expected to present the budget proposal to the National Assembly, emphasizing the government’s strategy for economic growth amid fiscal constraints. This presentation follows the parliamentary approval of new borrowings and revised economic parameters, including an oil price benchmark of $73.96 and production at 1.78 mbpd.
