Minister of Budget and Economic Planning Atiku Bagudu has asserted that the prevailing economic realities compelled the Federal Government to raise the 2024 budgetary proposal from the initial N26 trillion to N27.5 trillion.
Bagudu disclosed while briefing State House correspondents on the latest developments at the end of the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the Council Chamber, Presidential Villa, Abuja.
He said further details of the budget will be released when the President formally makes a presentation to the National Assembly in a few days.
Bagudu also said the MTEF and fiscal policy frameworks, which had been passed by the National Assembly, were further reviewed.
According to him: “This has an aggregate of 27 trillion, 500 billion naira, which is an increase of over 1.5 trillion from the previous estimate using the old reference prices.”
The minister disclosed that the forecast revenue for 2024 is N18.2 trillion, explaining that it is higher than the 2023 revenue.
He said: “The Federal Executive Council considered the 2024 Appropriation Bill. The MTEF was earlier approved by the National Assembly. It has an exchange rate of N700 to a dollar and a crude oil benchmark of $73.
“To improve revenue, the council further reviewed the MTEF, with an exchange rate of N750 to a dollar and a crude oil benchmark of $77. This will significantly improve revenue.”
Equally, the council, he said, has approved the 2024 Appropriation Act and its presentation to the National Assembly by the President.
Minister of Finance and Coordinating Minister of the Economy Wale Edun said in his briefing that FEC approved a $1 billion budget support loan from the African Development Bank (AfDB).
He 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 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 the fiscal situation of the government by increasing revenue, particularly tax revenue, through digitalisation, additional efficiency, and rationalisation 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 per cent which is the average for Africa; so many countries are above that level. It is about double where we are now and within a matter of a few years, their target is to reach 18 per cent.
He further disclosed that other economic measures, in the short term, are being contemplated, and the report has been well received by Mr. President and the council.
He went further by giving a summary of the memos that he got approved at the meeting.
“First of all, there was inherited financing, an inherited loan processing, which had to do with the $100 million financing from the African Development Bank and the $15 million from the Canada-African Development Bank Climate Fund.
“Essentially, it was processed before this administration came in, so it has been inherited. Essentially, it is concessional borrowing, around 4.2 per cent 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 Umuahia and Aba, in particular. That was approved,” he said.
Edun continued: “Secondly, there was the financing of $1 billion, concessional financing, 25 years, eight years moratorium at about 4.2 per cent per annum, which was approved by the African Development Bank for this administration.
“And really, it was in recognition of the macroeconomic measures that have been taken—the swift movement towards macro stability, restoring revenue, improving the foreign exchange situation, and so forth—by this government. The reward, as far as the African Development Bank, a concessional financing organisation, was concerned, was to provide $1 billion in general budget support
“Finally, to keep working hard and maximise 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 the Ministry of Finance 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.”