The Federal Executive Council, FEC on Monday proposed the sum of N26.01 trillion for the 2024 fiscal year to be submitted to the National Assembly.
The government said it was working towards ensuring that the January to December budget circle is maintained and that the 2024 budget is passed and signed before December 31, 2023.
The Minister of Budget and Planning, Atiku Bagudu, made the disclosure at the end of Council meeting presided over by President Bola Tinubu at the Council Chamber, Presidential Villa, Abuja.
Briefing State House correspondents at the end of the FEC, alongside his colleagues from Ministry of Information and National Orientation, Mohammed Idris, Minister of Finance and Coordinating Minister of Economy, Wale Edun, Works Engr. Dave Umahi, Industry, Trade and Investment, Doris Uzoka-Anite, Labour and Employment, Simon Lalong as well as the Minister of State for Labour, Nkeiruka Onyejecha, Bagudu said Council has approved the 2024-2026 Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Papers, FSP.
He explained that the executive is required by the Fiscal Responsibility Act to present to the National Assembly ahead of a budget presentation, a document which will provide the medium term economic outlook for the economy.
Benchmarks
He said FEC made assumptions about reference price for the price of crude oil which is at $73.96, exchange rate is put $700, oil production of 1.78 million barrel per day.
Debt service N8.25 trillion while inflation is put at 21 percent and GDP growth at 3.76 percent.
He said, “Now, it was presented on the background of the commendable measures that have been taken since June in order to restore macroeconomic stability by particularly the deregulation of petroleum prices, which we maintained that subsidies are gone and indeed the regulation of the foreign exchange market.
“So Council deliberated, as well as the implication of this and all measures promised in the renewed hope agenda consumer credits, mortgages, mortgage, reversed or dismissed institution as well as funding the newly aligned institutional changes particularly ministries with specific functions that are able to generate growth so that would be better for our country.
“The council members acknowledge the medium term expenditure framework, and it is agreed that we can go ahead to the next step of consultation and presentation to the National Assembly.”
He explained that “The Medium Term Expenditure Framework is a requirement of the Fiscal Responsibility Act. So as early as three document, so this Fiscal Responsibility Act is for the years 2024 to 2026.
“The several hundred of dollars reference price assumes optimism that investment flows will continue to come in. Given all the engagements, given all the positive tractions.
“We are seeing from investors from the engagement led by Mr. President personally, two different countries, in particular India, UAE and France, the engagements led by the coordinating Minister of the Economy engagement led by the trade and investment minister and indeed other ministers.
“So, now increasingly engagement made by the governor of the Central Bank of Nigeria, and indeed all other ministers. So we believe that these inflows will help us to clear the backlog and the exchange rate will begin to reflect a stronger value than the current weakness.
“There was a question on the assumptions. I spoke about a number of assumptions. The assumptions include oil price benchmark, which I said for 2024 we are assuming 73.96, oil production of 1.7 8 million barrels a day exchange rate of $700.
“Then the inflation of 21 percent and GDP growth rate of 3.76 percent . The aggregate expenditure is estimated at 26.01 trillion Naira for for the 2024 budget which includes statutory transfers of N1.3 trillion, non debt recurrent expenditure of N10.2 6 trillion debt service estimated at N8.2 5 trillion and as well as N7.78 trillion being provided for personnel and pension cost.
“Debt service increased because 22 point 7 trillion Naira with the expectation of scrutinizing the federal government debt at nine percent.
“So that is easily about 2.1 trillion Naira. This describes that equally personnel cost went up because of transfers under the agreement with labour.”
World Bank loan
The Minister of Finance and Coordinating Minister of the Economy, Edun while briefing said, “We also approved the application for financing from the World Bank. And in particular, the International Development Association which is really virtually free or zero interest lending arm or financing arm of the World Bank.
“The total is $1.5 billion. And the background is just as you heard from the Minister of planning and budget. The world today is one of high interest rates, as the developed world looks to fight inflation. They do it by restricting money, keeping interest rates high so that you can get inflation down. What that means is that interest rates for everybody else, become not just high but very painful, if not on affordable within that context.
Nigeria has been able to make the kind of macro economic moves, it has been able to take the tough decisions to restore balance in the economy in the government finances that has warranted support, that has gendered and has elicited support from the multilateral development banks.
“It’s on the basis of that, that the World Bank is willing to consider and to process on our behalf $1.5 billion of concessional financing, relatively cheap financing and financing that will be dispersed relatively quickly.
“And that was what was presented to the Federal Executive Council and the members approved that we go ahead with that financing even that it is affordable.
“Secondly, an $80 million financing from the African Development Bank was also approved by the Federal Executive Council.
“This financing is for a project in Ekiti called the Ekiti knowledge zone Project EKZ. An EKZ is basically to support young people and their quest to take on technology to use it to be employed to be trained and to benefit from being part of the knowledge economy, being part of the technological wave that is present very much in Nigeria, which is becoming a bigger and bigger share of the economy.
“So it’s $80 million to help the young people in the sector of Knowledge Economy technology and communications generally.”
Roads…
Also briefing, the Minister of Works, Engr. Umahi said, “Today we presented a memo on an inherited scope of road infrastructure from the past administration and the total length of the roads we inherited and bridges was 18,897 kilometer.
“We also brought to notice of FEC that a number of projects were awarded some lasting up to 20 years back, abandoned, ongoing with no proper funding and so on and so forth. And there’s some new critical roads totaling 12,000 kilometers and 24 bridges.
“You know, FEC approved for the continuation of these inherited projects and the new proposal and directed that Federal Executive Council committee, Chief of Staff, Minister for Finance and Coordinating Minister of Economy, Minister for Works, Minister of Budget and Planning, GCEO/GMD of NNPLC, Chairman of FIRS and SSA on Tax Reform, to meet and come up with strategies to source for funds and everything patterning to the funding.
“Number two, FEC was also informed on the ongoing projects and to mitigate so much inflation and variation of the projects, to have some of the projects that have attended completion to be redesigned on concrete and going forward for new projects to be done on concrete.
“FEC approved that concept that most of the ongoing projects should be desired on concrete pavements depending on the level of completion and if you’re doing Asphalt there are also conditions for that.
“FEC also approved the coastal road running from Phase 1 which runs from Lagos to Port Harcourt to Calabar. Phase2 runs from from Sokoto to Ogoja. It was approved to be done on EBC + F, that is Engineering Procurement and Construction plus Financing.
“And that eight roads that were started in the past administration for concessioning that have gone through all the processes were also approved. That the financial closure should be reached in the month of November.
“There were nine actually but one was pulled out that is Lagos-Ota-Abeokuta and that has been given to the Ogun State government based on their request that they should do the road on their own and they will follow the HDMI that is Hardware Development Management Initiative.
“No refunds for that but they will do it and toll it. And new 25 roads were also approved for concessioning, which takes a very long time on the PPP (Public Private Partnership) model.
“Lastly, the PPP for Ijora park in Lagos. It was approved that it should be done on PPP. And it was won by Beta Nigeria Ltd, which was actually started by the last administration. So we just have to convey what they did to FEC which we got approval.
“Finally, the consultancy for NNPC and FIRS who oversee the projects funded by them was also approved today.”
Meanwhile, FEC meetings will now hold on Mondays away from Wednesdays that was held in the past.
Idris, however also said the meetings may not be held weekly until there are pressing issues to discuss.