- Real Reason FEC Increased Budget Estimates By N1.5tr Emerges
- Why FEC Amended Exchange Rate To N750/$1, Crude To N77.96 Per Barrel-Bagudu
- FG To Fund Budget With $1b AfDB Loan, $15m Canada African Bank Climate Fund
In a race to meet the January to December Budget Cycle goal, the Federal Executive Council (FEC), Monday approved N27.5tr as the 2024 budget.
This is about N1.5 trillion increase from the previous budgetary estimate of N26tr.
Speaking on the reason for the increase, the Minister of Budget and National Planning, Atiku Bagudu, disclosed that the new proposal was legitimate because the appropriation was dependent on the final process that could be changed due to many variables including new priorities and MDA presentations.
Mr Bagudu explained that the Medium-Term Expenditure Framework MTEF that was approved by the National Assembly put the exchange rate at N700 per dollar and an oil price benchmark of 73.96 dollars.
He added that FEC revised the MTEF to use an exchange rate of N750 to a dollar and oil price benchmark of N77.96 in order to further fund the eight priority areas of the administration.
Mr Bagudu said that the president would give more breakdown of the budget during its presentation to the National Assembly, stressing that the presentation date would be decided by the National Assembly.
According to Bagudu, the FEC also approved an Appropriation Bill for 2024 with an aggregate expenditure of N27.5 trillion, an increase of over N1.5 trillion from the previous estimate.
He also noted that using the old reference prices, the forecast revenue is now N18.2 trillion which is higher than the 2023 revenue, including that provided in the two supplementary budgets, in which the deficit is lower than that of 2023.
On his part, The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said that the federal government has secured funds from the African Development Bank (AfDB) to support the 2024 budget.
He said that the $1bn funds would aid the effective implementation of the government reform policies as well as ensure transparency and accountability in the various tax reforms.
Mr Edun added that it would be used in areas such as power and ensuring the efficient utilisation of tax revenues, adding that it was not for project funding.
He also gave an update on the $100 million financing from the African Development Bank (AfDB) and $15 million from the Canada African Development Bank Climate Fund (CACF) inherited from the previous administration.
Furthermore, Edun said the African Development Bank approved $1 billion concessional financing for Nigeria with a moratorium of eight years, at about 4.2 per cent per annum, in recognition of the economic measures that have been taken and the swift movement towards macro stability.
He said the loan to be paid in 25 years at 4.2 per cent per annum, has a moratorium of eight years
He said the AfDB, a concessional financing organisation, is to provide $1 billion in general budget support.
“The Federal Executive Council has also approved a total limit of N2 trillion to be available for use by the 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,” Edun explained.
“The view is that there will be an opportunity to save about 50 billion naira or more in debt servicing over time by giving back expensive debt refinancing it with cheaper funding.”
Meanwhile, the FEC was briefed by the Fiscal Policy and Tax Reform Committee on its workings for roughly 90 days.
Addressing journalists, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the committee had proposed the removal of VAT on diesel and is looking to increase the ratio of tax revenue to GDP to 18 percent, which is the average for Africa.
In a related development, President Tinubu will present the 2024 Appropriations bill to a joint session of the National Assembly on Wednesday, The Matrix has gathered.
Ali Barde, Secretary of the Research and Information Department of the National Assembly, confirmed the development to journalists on Monday.
The Appropriations bill will contain budget proposals for the 2024 fiscal year.
This will be the first main budget President Tinubu will present to the National Assembly since he was inaugurated in May.
He had earlier signed the N2.17 trillion 2023 supplementary budget, recently passed by the National Assembly, into law.
