In a decisive move towards economic stability and fiscal responsibility, the federal government has explained why it wants to crash the country’s budget deficit from 6.11 percent to 3.88 percent of the Gross Domestic Product (GDP).
The minister of finance and coordinating minister for the economy, Wale Edun has unveiled a comprehensive strategy aimed at reducing the country’s budget deficit while significantly increasing tax revenues.
This ambitious plan, outlined by Edun, marks a pivotal shift from a trend of excessive borrowing to a focus on prudent financial management.
The primary objective of this initiative is to bring down the budget deficit, currently standing at over 6.11 percent of GDP, to a more sustainable level of 3.88 percent of GDP.
Specifically, Edun said that the budget proposals were realistic and practicable.
The budget deficit is projected at N9.18trn or 3.88 percent of GDP which is lower than the N13.78trn deficit recorded in 2023.
In the 2023 budget, the deficit represents 6.11 percent of GDP.
This notable reduction in deficit aims to alleviate financial strain, ensuring a more stable economic foundation for the nation.
Edun made this known at the 2024 budget breakdown in Abuja. He highlighted the need to realign revenue and expenditure management to deliver optimal value for money.
By prioritizing effective financial management, Edun said the government aims to instill confidence among investors and citizens in its fiscal policies.
He said: “The 2024 budget focus will be on value for money and raising the economy. The budget deficit is being brought down from about over 6.11 percent of GDP to 3.88 percent of GDP. That is a huge change in direction from unlimited and limitless borrowing to re-focusing on revenue and expenditure management to give value for money.”
Edun added that the target was to increase Tax- to-GDP from roughly under 10 percent now to 18 percent in a couple of years’ time.
He noted: “That target is a hugely ambitious one which we need to meet to reduce reliance on borrowing.”
Reducing the deficit signifies a pivotal move towards financial sustainability, reducing the country’s dependency on borrowing.
The minister reiterated the importance of this strategy in achieving economic stability and fostering an environment conducive to sustained growth.
The government’s commitment to fiscal prudence and responsibility Edun noted is underscored by this multifaceted plan, aimed at steering the nation towards a more balanced and robust economic future.
He also added that the budget would position the economy for foreign investors to come into the country through private partnerships.
Edun said: “There is privatisation in the budget. That is the direction of travel to create a stable macro-economic environment in which investors can come in and the government is yielding grounds to them and allowing them to come in and invest and provide goods and services to Nigerians.”
He added that that was the way jobs would be created and poverty reduced in the country.