President Bola Ahmed Tinubu unveiled the 2024 Federal budget proposals to a joint session of the National Assembly on November 29, 2023. Dubbed as the “Budget of Renewed Hope,” this budget marks the first comprehensive proposal of the current administration. It is strategically crafted to strengthen macroeconomic stability, diminish deficits, boost capital spending, and allocate resources in accordance with the administration’s eight priority areas. Below are the key highlights distilled from the budget proposal:

Key Parameters & Assumptions

The budget is grounded on specific economic parameters and assumptions, including:

• Benchmark Oil Price: $77.96
• Oil Production Estimate: 1.78 million barrels per day (bpd)
• Exchange Rate: ₦750/$
• GDP Growth: 3.76%
• Inflation Rate: 21.40%

Revenue Projection

The budget anticipates significant revenues, with a breakdown as follows:

• Total Federation Account Revenue: ₦26.62 trillion
• Total Available Revenue (inclusive of Grants, Aid, and Government-Owned Enterprises): ₦18.32 trillion
• Oil Revenue: ₦7.94 trillion
• Non-Oil Taxes: ₦3.52 trillion
• FGN Independent Revenues: ₦1.91 billion

Planned Expenditure

The proposed expenditure for 2024 is ₦27.50 trillion, distributed across various sectors:

• Statutory Transfers: ₦1.3 trillion
• Non-debt Recurrent Costs: ₦9.92 trillion
• Personnel Costs: ₦5.80 trillion
• Pensions, Gratuities, etc.: ₦673.13 billion
• Overheads: ₦792.39 billion
• Capital Expenditure: ₦673.13 billion
• Debt Service: ₦8.25 trillion
• Sinking Fund: ₦243.66 billion

Budget Deficit & Funding

The budget projects a deficit of ₦9.18 trillion, which will be funded through:

• New Borrowings: ₦7.83 trillion
• Privatization Proceeds: ₦298.49 billion
• Drawdowns on loans for specific development projects: ₦1.05 trillion

Other Key Highlights

• Focus on Education: A sustainable model for funding tertiary education will be implemented, including the operationalization of a Student Loan Scheme in January 2024, with ₦2.18 trillion allocated to the education sector.
• Social Development: Review and expansion of social investment programs, with a focus on targeted cash transfers to vulnerable households.
• Infrastructure Financing Innovations: Strengthening of concessions and public-private partnerships (PPPs) to finance major infrastructure projects, particularly in energy and transportation sectors, promoting renewable energy sources.
• Debt Service: Significant provisions made for Debt Service and Sinking Fund to retire maturing bonds, reflecting the impact of legacy borrowings.
• Finance Bill 2024: Potential introduction of an Emergency Economic Intervention Bill to support tax and fiscal reforms, aimed at increasing revenue to GDP ratio to 18%.

Conclusion

The 2024 budget proposal addresses critical economic challenges amidst global and domestic uncertainties. Revenue generation remains a key constraint, but if revenue targets are met, it could enhance budget performance, reduce deficits, and limit additional borrowing. The proposed initiatives reflect a strategic approach towards sustainable economic growth and development in Nigeria.

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