• Sets crude oil at $73.96, approves a $1.5 billion loan from the World Bank
• Mondays will be the new day for FEC sessions; Tinubu swears in Ibrahim-Bio, Lawal, and Olawande as ministers
The Federal Government yesterday benchmarked its 2024 budget on a crude oil price of $73.96 per barrel and an exchange rate of N700 to the dollar, while projecting N26 Trillion for the fiscal year, with a target to submit the same to the National Assembly before December 31, 2023, in spite of the foreign exchange market's volatility.
Additionally, it was stated that the administration would continue to implement the budget from January to December since President Bola Tinubu would soon propose the 2024 appropriation bill to the National Assembly in order to assure its approval before the year's end.
Atiku Bagudu, the minister of planning and budget, revealed the information at the conclusion of the Federal Executive Council (FEC), which was chaired by President Bola Tinubu.
Mohammed Idris, Minister of Information, Wale Edun, Minister of Finance and Coordinating Minister of Economy, Simon Lalong, Minister of Works and Housing, Dave Umahi, Minister of Industry, Trade and Investment, Doris Uzoka-Anite, and Bagudu's colleagues also participated in the briefing. He added that the Council has adopted the fiscal strategy papers (FSP) and medium-term expenditure framework (MTEF) for 2024–2026.
"The total estimated spending for the 2024 budget is N26.01 trillion, which comprises N1.3 trillion in statutory transfers and N10.26 trillion in non-Debt recurrent expenses. An estimated N8.25 trillion will go into debt service and another N7.78 trillion will go toward employee pension costs.
The Minister stated that the Fiscal Responsibility Act requires the executive to provide a document outlining the medium-term economic outlook for the economy to the National Assembly prior to the presentation of the budget. He added that the FEC made assumptions regarding the reference price for the price of crude oil, which it set at $73.96, as well as an exchange rate of N700 to a dollar.
The liberalization of fuel prices and the management of the foreign exchange market are just two of the admirable steps that have been done since June to restore macroeconomic stability.
Just then, the Federal Government approved a request for $1.5 billion in World Bank financing and an additional $80 million in African Development Bank (AfDB) financing.
The financing will be provided by the International Development Association, known for its nearly interest-free loans, according to Minister of Finance Edun.
He explained that multilateral development banks have supported Nigeria's efforts to restore economic balance and careful financial management in a world where high interest rates are being used to fight inflation.
Edun said that as a result, the World Bank was prepared to offer $1.5 billion in affordable and speedy disbursement concessional finance.
"To restore economic balance, Nigeria has been able to make the difficult decisions and execute the macroeconomic actions that have won the support of the international development banks.
Regarding the $80 million loan from the AfDB, the minister explained that it was intended for the Ekiti Knowledge Zone project (EKZ) in the state of Ekiti, which aims to empower young people by facilitating their participation in the knowledge economy and the technology sector.
"The main goal of EKZ is to assist young people in their efforts to embrace technology, use it to find employment, receive training, and profit from being a part of the knowledge economy and technological wave, which are taking up an increasing percentage of the economy. Thus, $80 million will be used to support young people working in the communications and information economy sectors more broadly.
This new borrowing occurs despite numerous worries expressed by financial and other stakeholders about the government's ongoing borrowing and unmanageable debt load.
According to the Debt Management Office (DMO), at the end of the second quarter of this year, Nigeria's total public debt had increased to N87.38 trillion. When compared to the N49.85 trillion reported at the end of March 2023, this indicates a gain of 75.29 percent, or N37.53 trillion.
The overall internal debt of Nigeria is N54.13 trillion, while the total external debt is N33.25 trillion, according to data from the DMO.The DMO cautioned that the Federal Government's anticipated revenue of N10 trillion for 2023 could not support new borrowings in its 2022 Debt Sustainability Analysis Report.
The government's expected debt service-to-revenue ratio of 73.5% for this year is excessive and poses a risk to the sustainability of the debt, according to the office. It stated that larger levels of borrowing could not be supported by the government's current revenue profile.
However, according to the International Monetary Fund (IMF), Nigeria's total public debt situation of N87.3 trillion ($113.4 billion) is sustainable and does not present any immediate concerns to the country's economy.
Abebe Selassie, Director of the IMF's African Department, emphasized that Nigeria's main concern with regard to its debt position is the rising cost of debt servicing during the presentation of the Economic Outlook for Sub-Saharan Africa at the IMF/World Bank Annual Meetings in Marrakech, Morocco, over the weekend.
He emphasized how difficult it is for Nigeria to raise enough tax income to pay off its debt and make necessary infrastructure improvements. Furthermore, he made it clear that the IMF was unaware of any debt negotiations, debt profiling, or debt restructuring that were taking place in Nigeria.
Bagudu yesterday added clarification about the higher debt payments, stating that it is due to the securitization of the N22.7 trillion Ways and Means (W&M) debt, which made it a nine percent liability of the Federal Government.
"The debt service comes to N2.1 trillion. In addition, staff costs increased dramatically as a result of transfers from the FG and Organized Labor agreement, he added, noting that FG would offer a supplemental budget in light of its expanding duties following the withdrawal of the gasoline subsidy.
"Yes, there would be a supplementary budget because there are continuing obligations and there are responses to security, which can be immediate," Bagudu said, adding that the ostensible delays would not shorten the implementation cycle of January through December because the President is in contact with the National Assembly well in advance of the presentation day.
Meanwhile, the Federal Government has switched from the customary Wednesday to Monday for FEC sessions. Mohammed Idris, the minister of information and national orientation, made this announcement yesterday. However, he disclosed that, in a surprising break from usual practice, the FEC meetings might not be held weekly until there are urgent matters to consider.
President Tinubu swore in three newly appointed ministers at yesterday's meeting, the second since the Cabinet was established in August. They are Ayodele Olawande, Balarabe Abbas Lawal, and Dr. Jamila Ibrahim-Bio Jummai, who have recently undergone screening and approval by the Senate.
The Council also observed a moment of silence in memory of Mobolaji Ajose-Adeogun, a former minister of the Federal Capital Territory (FCT), who passed away recently. Ajose-Adeogun was appointed FCT Minister by the Murtala Mohammed military administration in 1976 and held the office until his death in 2009 at the age of 96.
