By Egena Sunday Ode
The Federal Executive Council (FEC) has approved the 2024 budget estimate of N27.5 trillion to be presented to the National Assembly.
Projections in the budget included crude oil benchmark of $77.96 per barrel and N750 to a Dollar exchange rate.
The 2024 budget proposal is N1.5 trillion higher than the initial N26.5trillion earlier approved by the FEC before the passage of the Medium Term Expenditure Framework and Fiscal Policy document, by the National Assembly
Minister of Budget and Economic Planning, Atiku Bagudu disclosed this while briefing newsmen at the of the FEC meeting presided over by President Bola Tinubu at the Aso Rock Presidential Villa, Abuja, on Monday.
According to the minister, the Council also approved a revised Medium Term Economic Framework and Fiscal Policy document which will be represented to the National Assembly alongside the 2024 Appropriation Bill, describing the budget as “a process until it is signed into law”
He said: “Today the Federal Executive Council considered the 2024 Appropriation Bill. You may recall that the Medium Term Expenditure Framework was earlier approved and transmitted to the National Assembly, which the assembly graciously approved and that approved Medium Term Expenditure has the exchange rate of N700 to $1 and equally, the benchmark crude oil price at $73.96 cent.
“However, in Mr. President’s determination to find more money to fund our priorities, today the Federal Executive Council further revised the Medium Term Expenditure Framework and Fiscal Policy Framework and two of the important decisions were to use an exchange rate of N750 to $1 and also a benchmark crude oil reference price of $77.96, meaning $4 more than the earlier approval.
“This will significantly increase government revenue that Mr. President intends to use in further supporting the ministries, departments and agencies in the execution of the eight priority areas, particularly Health, Education, infrastructure, security and other developmental areas.
“Equally, the Federal Executive Council approved the 2024 Appropriation Bill and the presentation of such to the National Assembly by His Excellency, Mr. President. The bill has an aggregate expenditure of N27,500,000,000,000, which is an increase of over N1.5 trillion from the previously estimated, using the old reference prices.
“The forecast revenue is now N18.32 trillion, which is higher than the 2023 revenues, including that provided in the two supplementary budgets. Equally and commendably, the deficit is lower than that of 2023. Details of the Renewed Hope Budget will be announced by Mr. President when he makes the presentation to the National Assembly.
Also speaking at the post FEC press briefing, Wale Edu, Minister of Finance and Coordinating Minister of the Economy, disclosed that FEC also approved a concessionary budget support loan of $1b from the African Development Bank (AfDB).
It is not a project-based funding, the minister explained.
He also noted that the Presidential Fiscal Policy and Tax Reforms committee headed by Taiwo Oyedele, briefed the Council on its recent report presented to the President
He revealed that the committee had affected the economy, helping to boost fiscal position of the government and assisting to increase tax revenue to GDP to 18% in Nigeria, from the current 7.5%.
Edun said: “There was a briefing by the Fiscal Policy and Tax Reform Committee, essentially they’ve been working for roughly 90 days, they’ve been working very well and very effectively, such that they are in a position to have even impacted the economy by coming up with initial reforms, as well as signposting the way forward the in terms of very important targets.
“So in a nutshell, the policy on VAT removal on diesel is from them, they are looking to help boost fiscal situation of the government by increasing revenue, particularly tax revenue, through digitalization, additional efficiency and rationalization of the range of taxes that we have at the moment.
“They are looking to increase the ratio of tax-revenue-to-GDP to 18%, which is the average for Africa; so many countries are above that level. It is actually about double where we are now and within a matter of a few years, their target is to reach 18%. Other economic measures, in the short term, are being contemplated and their report was well received by Mr. President and indeed, the whole Federal Executive Council.
“At the same time, I would like to give a summary of the memos that I had approved at Council today and of course, they were all to do with financing. First of all, there was an inherited financing, an inherited loan processing, which was to do with the $100 million financing from African Development Bank and $15 million from the Canada-African Development Bank Climate Fund.
“Essentially, it was processed before this administration came in and, so it has been inherited. Essentially, it is concessional borrowing, around for 4.2% per annum by Abia State, through the federal government. So the funds are to be lent to Abia State and they are for waste management and rehabilitation of roads in Umahia and Aba, in particular. That was approved.
“Secondly, there was financing of $1 billion, concessional financing, 25 years, eight years moratorium at about the same for 4.2% per annum, which was approved by the African Development Bank for this administration and really, it was in recognition of the macro economic measures that have been taken, the swift movement towards macro stability, restoring revenue, improving the foreign exchange situation, and so forth, that have been taken by this government. The reward, as far as the African Development Bank, a concessional financing organization, was to provide $1 billion in general budget support
“Finally, in order to keep working hard and maximizing the ability of the government to use the markets and to take advantage of different situations and improve situations, the Federal Executive Council approved a total limit of N2 trillion to be available for use by Ministry of Finance in order to go in and out of the market and essentially to, where possible, bring down the rate of interest on the current outstanding.
“So essentially, it will be refinancing and the view is that there will be an opportunity to save about N50 billion or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding.”