The Federal Executive Council (FEC) has recently unveiled its ambitious proposal for the 2024 budget, setting the stage for a comprehensive fiscal plan that aims to propel Nigeria towards economic stability and growth. This proposal, amounting to a staggering N26.01 trillion, marks a pivotal moment in the nation’s economic trajectory. In this article, we delve into the key highlights and implications of this budget proposal, aiming to provide a detailed insight into the government’s financial plans for the upcoming fiscal year.
Maintaining the January to December Budget Cycle
One of the primary goals of the 2024 budget proposal is to maintain the January to December budget cycle. The government is committed to ensuring that the budget is passed and signed into law before December 31, 2023. This commitment reflects a strategic move to enhance budget predictability and streamline financial planning, ultimately fostering economic stability.
Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Papers (FSP)
The FEC’s approval of the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Papers (FSP) serves as the foundation for the 2024 budget proposal. The Fiscal Responsibility Act mandates the presentation of this framework to the National Assembly before the budget presentation. This document provides a medium-term economic outlook, outlining key economic parameters and assumptions that guide the budget’s formulation.
The budget proposal is built upon a set of assumptions that underpin the fiscal plan’s viability. Notable assumptions include:
- Crude Oil Price: The reference price for crude oil is set at $73.96 per barrel, reflecting an optimistic outlook for oil prices. This assumption is based on expectations of sustained investment inflows and positive engagements with key countries such as India, UAE, and France.
- Exchange Rate: The exchange rate is assumed to be $700, signaling the government’s commitment to maintaining a stable foreign exchange market.
- Oil Production: The budget proposal accounts for oil production of 1.78 million barrels per day, a critical factor in Nigeria’s revenue generation.
- Debt Service: The budget allocates N8.25 trillion for debt service, emphasizing the government’s dedication to managing its debt obligations effectively.
- Inflation: With an assumed inflation rate of 21 percent, the government is keen on mitigating the impact of rising prices on the economy.
- GDP Growth: The budget proposal targets a GDP growth rate of 3.76 percent, reflecting aspirations for sustainable economic expansion.
Economic Reforms and Investment
The budget proposal aligns with commendable measures taken since June, aiming to restore macroeconomic stability. Key reform measures include the deregulation of petroleum prices and the regulation of the foreign exchange market. These reforms are expected to enhance investor confidence, attract foreign capital, and bolster economic growth.
Infrastructure development is a pivotal component of the 2024 budget proposal. The FEC recognizes the importance of revitalizing Nigeria’s infrastructure to foster economic growth. Inherited projects, totaling 18,897 kilometers of roads and bridges, are set to be continued, addressing longstanding issues of abandonment and insufficient funding. Additionally, new critical roads spanning 12,000 kilometers and 24 bridges are on the agenda, enhancing connectivity and trade.
To ensure the successful implementation of these infrastructure projects, the FEC has approved a range of financing initiatives. These include:
- World Bank Loan: The government has secured a $1.5 billion loan from the World Bank’s International Development Association, offering concessional and low-interest financing. This funding will be disbursed expediently to support vital projects.
- African Development Bank Financing: An $80 million financing from the African Development Bank has been approved for the Ekiti Knowledge Zone Project. This initiative aims to empower young individuals in the technology sector, supporting their employment and training in the knowledge economy.
- Road Concessioning: The FEC has granted approval for the concessioning of eight roads that were initiated in the past administration. An additional 25 roads are earmarked for concessioning under the Public-Private Partnership (PPP) model.
Coastal Road Development
One of the noteworthy infrastructure projects is the coastal road development, which spans from Lagos to Port Harcourt to Calabar (Phase 1) and from Sokoto to Ogoja (Phase 2). This project will be executed under the Engineering Procurement and Construction plus Financing (EBC + F) model, ensuring the development of critical transportation links.
PPP for Ijora Park
The FEC has also approved the Public-Private Partnership (PPP) model for the Ijora Park in Lagos. This project, which aims to revitalize the park, was won by Beta Nigeria Ltd. It reflects the government’s commitment to leveraging private sector participation in enhancing public infrastructure.
Meeting Schedule Adjustment
In a notable change, FEC meetings will now be held on Mondays, departing from the previous practice of Wednesday meetings. The adjusted schedule is intended to improve efficiency and decision-making. However, it’s worth noting that meetings may not be held weekly unless pressing issues necessitate convening.
In conclusion, the 2024 budget proposal presented by the Federal Executive Council outlines a bold vision for Nigeria’s economic future. With a focus on maintaining budget predictability, implementing economic reforms, and investing in infrastructure, the government aims to steer the nation toward stability and growth. The budget’s assumptions, financing initiatives, and commitment to infrastructure development set the stage for a promising year ahead.