President Bola Ahmed Tinubu’s government has approved N27 trillion as the 2024 appropriation for the country.
The Federal Executive Council (FEC) gave the approval on Monday at the weekly executive meeting presided over by the president.
The 2024 appropriation would be the first yearly budget to be presented by President Bola Tinubu a few weeks after he presented the 2023 supplementary budget before the National Assembly.
The presentation of the budget suggests that Mr Tinubu will maintain the January to December budget cycle initiated by former President Muhammadu Buhari.
The Minister of Budget and Economic Planning, Atiku Bagudu while briefing State House correspondents after the FEC meeting said the government increased the 2024 budget proposal from the initial N26 trillion to N27.500 trillion to meet the present economic realities.
The government has also revised the Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Papers, FSP, which initially had N700 per dollar as an exchange rate but is now N750 per dollar, while the oil benchmark has also been reviewed from the initial $73 per barrel that was approved by the National Assembly to $77 per barrel.
The Minister said further details of the budget will be released when the president presents the budget to the National Assembly in few days time.
Bagudu said the MTEF and fiscal policy frameworks which has been passed by the National Assembly were further reviewed.
According to him, “This has the aggregate of 27 trillion 500 billion naira which is an increase of over 1.5 trillion from the previously estimated using the old reference prices”.
“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 FEC approved the 2024 appropriation act and presentation of such to the National Assembly by the President.
Also briefing, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said that the Council approved $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 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 percent 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 percent.
“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 4.2 percent 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.
“Secondly, there was financing of $1 billion, concessional financing, 25 years, eight years moratorium at about the same 4.2 percent 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 N2trillion 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.”