FEC greenlights $1bn loan for economic reforms, Tinubu to announce N27.5tn budget for 2024

President Bola Tinubu will present the 2024 Appropriation Bill of N27.5tn to a joint session of the National Assembly on Wednesday. The bill, which is tagged the Renewed Hope Budget, reflects the Federal Government’s commitment to economic reforms and development.

The bill was approved by the Federal Executive Council on Monday, after increasing it from the N26.01tn earlier considered by the council. The Minister of Budget and Economic Planning, Abubakar Bagudu, said the increase was due to the revision of some key benchmarks, such as the exchange rate and the crude oil price.

According to Bagudu, the Federal Government is projecting N18.32tn revenue for the 2024 fiscal year, which is higher than the 2023 revenues, including those provided in the two supplementary budgets. He also said the deficit is lower than that of 2023, and details of the budget will be announced by Tinubu when he makes the presentation to the National Assembly on Wednesday.

Bagudu said the council approved the use of an exchange rate of N750 to $1 and a benchmark crude oil price of $77.96, which are higher than the N700 to $1 and $73.96 approved in the Medium Term Expenditure Framework passed by the National Assembly.

He said the changes will significantly increase government revenue that Tinubu intends to use in supporting the ministries, departments and agencies in the execution of the eight priority areas, particularly health, education, infrastructure, security and other developmental areas.

The minister also announced that the council approved a $1bn concessionary loan from the African Development Bank for general budget support and to improve forex availability in the country.

The loan will have an interest rate of 4.2 per cent for 25 years with an eight-year moratorium, according to the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

Edun said the loan from AfDB is a budget support fund for ongoing economic reforms and to support government programmes in the power sector, social inclusion, and the fiscal policy reforms as a whole sector policy initiative. He also said the council received a briefing from the Fiscal Policy and Tax Reform Committee, which has been working for 90 days to come up with initiatives to boost tax revenue and improve the tax system.

The finance minister said the committee has made some recommendations, such as expanding the tax base, simplifying the tax administration, enhancing compliance, and reducing tax evasion and avoidance. He said the committee will submit its final report to the council soon.

Edun 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 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 actually about the double of where we are now and within a matter of a few years, their target is to reach 18 per cent.”

The minister said the FG was contemplating other economic measures in the short-term, adding that the tax reforms council’s report was well received by the President and other council members.

Edun also stated that the Federal Executive Council approved a total limit of N2tn 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 interest rate on the current outstanding.

He said this was “in order to keep working hard and maximising the ability of the government to use the markets and to take advantage of different situations and improve situations.”

“So essentially, it will be refinancing and the view is that there will be an opportunity to save about N50bn or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding,” he concluded.

Meanwhile, the Secretary of Research and Information at the National Assembly, Dr Ali Barde Umoru, on Monday confirmed that Tinubu would present the appropriation bill to NASS on Wednesday.

Ahead of the budget presentation, Tinubu had three weeks ago forwarded to both chambers of the National Assembly, the 2024 – 2026 MTEF and Fiscal Strategy Paper where the sum of N26.1tn was proposed as the total expenditure profile for the 2024 fiscal year.

The Senate through its committee on Finance after two weeks of interactive sessions with heads of Ministries, Departments and Agencies on revenue and expenditure projections made for them, approved the MTEF.

It specifically approved the N26.1tn proposed as 2024 budget and other parameters as proposed by the President.

It also approved the new borrowings of N7.8tn, pegs benchmark oil price for 2024 at $73.96 and oil production volume per day at 1.78m barrels.

Meanwhile, the Speaker of the House of Representatives, Tajudeen Abbas, also confirmed Tinubu would present the 2024 Appropriation Bill before a joint session of the National Assembly.

The Speaker disclosed this while declaring open a one-day capacity building retreat for chairmen and deputy chairmen of House committees in Abuja.

Speaking at the event, the lawmaker representing Zaria Federal Constituency, Kaduna State, revealed plans to convene a town hall meeting with stakeholders on the 2024 Appropriation Bill in order to get the inputs of Nigerians on the budget process.

The Speaker stated that in line with its slogan ‘Peoples House,’ the 10th House was committed to citizens’ greater participation of Nigerians in the governance/ democratic process.

He said, “As we expect to receive the 2024 Appropriation Bill in a few days, I wish to state that the House will convene a Budget Town Hall Meeting to enable citizens to make inputs into the 2024 Appropriation. It is the first time such an engagement is planned at the national level.

“I invite our partners to work with us in preparing for a vigorous and all-inclusive budget process. To ensure speedy passage of the 2024 budget, I charge all committees to double their efforts and finalise all considerations in two weeks.

He added, “However, this does not imply haphazard and superficial consideration of the budget. Rather, it is a challenge to you to deploy all resources and make the needed sacrifices to ensure we pass the budget in good time for the good of all Nigerians.

“It is no exaggeration to say that the National Assembly, especially the House of Representatives, has progressively exercised its powers to ensure that the executive is always answerable to the Nigerian people.”

The Speaker also maintained that despite the growing commitment of the Nigerian legislature in promoting good governance, the various committees face a number of challenges that impede their overall effectiveness.

He said, “Anyone familiar with the inner workings of the legislature knows the quantum of resources required to undertake robust oversight adequately, hire experts and consultants, undertake inspection visits and draft quality legislation.

“Ironically, while Nigerians expect the best representation from the National Assembly and its members, they do not always understand that this is only possible through adequate funding.”

Speaking on the theme of the retreat, “Improving Legislative Performance through Effective Committee Management,” Abbas said it was deliberately picked to provide a comprehensive understanding of the tasks ahead, especially for many of those who were taking up these legislative responsibilities for the first time.

“The legislature is central to our democracy, and a strong House is integral to ensuring that governance is conducted in an open, accountable, and representative manner.

On his part, the Deputy Speaker, Benjamin Kalu, stated that at the heart of Nigeria’s parliamentary democracy lies the House of Representatives, “an institution tasked with the solemn responsibility of representing the will of the Nigerian people.”

In his goodwill message, Chief of Staff to President Tinubu, Mr Femi Gbajabiamila urged leaders and members of the Standing Committees to unite while scrutinising the budgetary proposals during defence sessions.

Meanwhile, a member of the House representing Ede South/Ede North/ Ejigbo Federal Constituency, Osun State on the platform of the Peoples Democratic Party, Oluwole Oke, has allayed fears of possible difficulty in implementing the January -December budget cycle.

Oke, who chairs the House Committee on Judiciary, said the delay in the presentation of the budget might not be unconnected with the need for a thorough job by Mr President and his team.

Speaking exclusively with The PUNCH, the lawmaker said, “ Mr President and his economic team as assembled are professionals and I am sure they want to do a thorough job, more so that they’re just coming on board . I think we should give him benefit of doubt

“The parliament is also ready to give the budget accelerated consideration and passage in the interest of Nigerians.”

Similarly, the member representing Ezeagu/Udi Federal Constituency of Enugu State on the platform of the Labour Party, Sunday Umeha said the supposed delay might turn out to be a blessing for the benefit of Nigerians.

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