Senator Abubakar Bagudu, Minister of Budget and Economic Planning, stated on Wednesday that the 2024 Federal Government income is estimated to be N18.32 trillion, a 66 percent increase over the 2023 budget.
According to the Minister, the Federal Government allocated the majority of its sectoral expenditure in the proposed 2024 budget to Defence and Security (N1.33 trillion), Education and Health (N1.33 trillion), Infrastructure (1.32 trillion), and Social Development and Poverty Reduction (N534 billion).
The debt servicing is expected to gulp N9.18 trillion.
The Defence and Security sector received N3.25 trillion, or 12% of the budget, while the Education sector received N2.18 trillion, or 7.9% of the budget, and the Health sector received N1.33 trillion, or 5% of the budget. Infrastructure received N1.32 trillion, or 5% of the budget, while Social Development and Poverty received N534 billion, or 2%.
“The FGN’s aggregate expenditure in 2024 is estimated to be N27.50 trillion,” according to the Minister. This is 10.8% (or approximately N2.68 trillion) more than the FGN’s aggregate expenditure projection for 2023 of N24.82 trillion (including the N2.996 billion supplemental provision).
“The 2024 expenditure estimate includes statutory transfers of N1.30 trillion and non-debt recurrent expenditure of N10.26 trillion. The provisions of N8.25 trillion and N243 billion have been made for Debt Service and Sinking Fund to retire maturing bonds issued to local contractors/creditors, respectively.
“A total of N6.48 trillion (inclusive of N1.02 trillion for Government Owned Enterprises) is provided for personnel and pension costs, an increase of N576.16 billion or 9.8% over the 2023 provision. This is 35.4% of the projected aggregate revenues for 2024.
“The aggregate amount available for capital expenditures in the 2024 budget is N8.70 trillion, higher than the 2023 provision of N8.43 trillion”, he stated.
Giving details on the planned deficit, he added: “The budget deficit is projected to be N9.18 trillion in 2024, i.e., N4.6 trillion down from N13.80 trillion budgeted in 2023. The proposed deficit represents about 50% of total FGN revenues and 3.88% of the estimated GDP. The high projected level of fiscal deficit in 2024 is partly attributable to the proposed salary review of Federal workers across the board, increased pension obligations and higher debt service costs.
“At 3.88%, the projected level of deficit is higher than the 3% threshold stipulated in the Fiscal Responsibility Act (FRA), 2007, but significantly lower than the 2023 level of 6.11%; FRA 2007 however allows government to exceed the 3% threshold if justified by threats to national security”.
He explained that of the aggregate revenue N7.94 trillion or 43.3 percent is projected to come from oil-related sources while the balance of N10.39 trillion is to be earned from non-oil sources.
Bagudu added that the Federal Government’s share of non-oil taxes is projected at N3.52 trillion compared to N2.43 trillion in 2023, while its share of minerals and mining revenues is N4.46 billion in 2024 from N3.64 trillion in 2023.
He stated that the projection for independent revenue has been moderated to N1.91 trillion, down from N3.17 trillion while the projection for grants and donor-funded projects is N685.63 billion.
He explained that dividends from NLNG, Bank of Industry, Development Bank of Nigeria, Galaxy Backbone and Bank of Agriculture are projected at N357.92 billion compared to N81.79 billion in 2023. Only 25% of the capital budget released in 2023
The Minister in his analysis of the 2023 budget performance disclosed that only N1.47 trillion or 25 percent has been released to ministries, departments, and agencies for capital expenditure at September 2023.
Overall, total spending up to September was N12.7 trillion with N5.79 trillion going for debt service and N3.78 trillion for personnel cost including pensions.
On the revenue side, he said the “gross oil and gas revenue for 2023 was projected at N9.38 trillion. As of September 2023, N6.58 trillion was realized as against the prorated estimate of N7.04 trillion. This represents about 79.3% performance.
“After accounting for deductions (including 13% derivation), net oil and gas revenue inflows to the Federation Account amounted to only N2.93 trillion. This is N530.29 billion or 20.7% less than the target. Net non-oil revenue also outperformed the pro rata target by N1.62 trillion or 30.4%. Only Customs revenue performed below target by 27%.
“The amount available for distribution from the Federation Account – Main Pool was N7.48 trillion. Of this, the Federal Government received N3. 94 trillion, while the States and Local Governments received N2.00 trillion and N1.54 trillion, respectively.
“Federal, State, and Local governments received N341.73 billion, N1.14 trillion, and N797.37 billion, respectively from the VAT Pool Account, and N18.33 billion, N61.09 billion, and N42.76 billion, respectively from EMTL”.
He disclosed that as of September 2023, “FGN’s retained revenue was N8.65 trillion, approximately 104.5% of the pro-rata target of N8.28 trillion”, stressing that “the FGN share of oil revenues was N1.42 billion (84.7% performance), while non-oil tax revenues totalled N2 50 trillion (a performance of 135%)”.
Senator Bagudu explained that the growth and performance of the 2023 budget was far below expectation.
“The Nigerian economy posted positive but lower than expected growth despite several earnings be it GDP Growth, the measure that is used to globally compare one country and the other showed that the real economy improved by 2.5 per cent in the third quarter of 2023 with slightly higher than 2.25 per cent recorded in the second quarter of 2022.
“The budget performance was largely sustained by the non-oil exports. In fact, the World Bank recently lowered 2023 GDP growth for Nigeria from 2.5 per cent”.
Speaking on measures put in place by the government to support local production, he said: “Investment is being made in Nanotechnology and will be escalated to the state level. We are not there yet, the heavy load is being lifted but we are not there yet. Extra efforts need to be put in place and be vigilant to get there”.
Nigeria, Qatar Gas Cooperation To Pave Way For Global Clean Energy, Says Tuggar
Nigeria’s Minister of Foreign Affairs, Ambassador Yusuf Tuggar, has called for collaboration between Nigeria and Qatar to promote gas diplomacy, energy transition away from nonrenewable energy, and highlighted the key benefits of Nigeria-Qatari relations for Africa and the global gas sectors.
He made the call while delivering a lecture at the Doha Diplomatic Institute on Thursday on the sidelines of President Bola Tinubu’s official visit to the State of Qatar.
The Minister said both Qatar and Nigeria are blessed with hydrocarbon deposits that place them at the centre of the new energy equation. He also stated that while Qatar has the world’s third largest gas reserves and Nigeria is best known as Africa’s largest oil producer, it is primarily a gas province with a small amount of oil. “We are sitting on reserves of 208TCF. We use our reserves to develop our economies – and are confident that we can also develop partnerships that will support the process of transition.”
Amb. Tuggar further stated that it is incumbent on gas-rich countries like Qatar and Nigeria to make a case for gas as a cleaner alternative and transition fuel fit for human use while also adding that “Nigeria requires a partner such as Qatar that shares a similar epistemology of gas as a resource for human utility to develop its gas assets further and expand market share for the benefit of both countries.” He also enthused that “Nigeria can help Europe and other industrial economies to diversify their sources of energy supply. In turn, a more stable market creates more stable prices, and a more stable platform for economic growth, improved living standards and new opportunities.”
The Minister also stated that Nigeria currently has a 6-train LNG with a nameplate capacity of 22MTPA, with an 8MTPA 7th train under construction and another 8th train planned for the near future. Nigeria also has two additional LNG projects that have reached advanced planning stages; Olokola (OK LNG) and Brass LNG. Opportunities for quick Floating LNG projects also abound. But even before that, 150km from Nigeria lies Equatorial Guinea’s Bioko Island LNG, fresh out of gas supplies and ready to take in feedstock from Nigeria.
The Minister said that beyond the LNG, “Nigeria has two major gas pipeline projects with the potential of delivering gas to Europe currently underway- The Trans-Saharan Gas Pipeline through Algeria can potentially deliver a conservative 2 billion scf/d while the 7,000km Nigeria-Morocco Gas Pipeline seeks to join the Maghreb-European Pipeline (MEP) with a capacity of 30 billion cubic metres/day.”
He added that all of these projects provide huge opportunities for Qatar to partner with Nigeria to enter into new markets for gas in Africa and beyond, noting that: “Qatar possesses the requisite big-ticket experience in negotiating complex international business deals as well as the interlocutory mediation skills for the diplomacy required to pull off a Nigeria-Morocco pipeline, where over 15 countries would be involved.
He said the kind of political and economic partnership that is needed to develop such a complex project can be the foundation for a new diplomatic order in the region. He said: “A partnership that further brings us together and can provide new incentives to mitigate or minimize some of the challenges that we have faced, for example in recent months over the faltering of democracy in parts of the region. ,
New CBN Interest Rate Hike Will Worsen Economic Hardship, Job Losses
Peter Obi, former governor of Anambra State, believes that the Central Bank of Nigeria’s (CBN) increase in the Monetary Policy Rate (MPR) will exacerbate the country’s economic hardship.
According to the Conclave, the CBN increased the MPR by 400 basis points, from 18.75% to 22.75%.
CBN Governor Yemi Cardoso, who chairs the Monetary Policy Committee (MPC), announced the committee’s decisions in Abuja on Tuesday, February 27, 2024.
However, Obi, in a statement posted on his X (formerly Twitter) account on Thursday, February 29, described the increase as counterproductive, claiming it would result in more job losses in the country.
The Labour Party’s (LP) presidential candidate for the 2023 election stated, “Let me confess that being a vintage Onitsha-based trader does not confer on me the status of an economic expert.
“With my vast trading knowledge and my involvement in the real sector, I am of the strong opinion that the recent decision of the Monetary Policy Committee to increase the Monetary Policy Rate, MPR, to 22.5% and the Cash Reserve Ratio, CRR, to 45% will further worsen the economic situation of most Nigerian households, as it is bound to cause more job losses in the productive sector, especially manufacturing and other sectors that rely on bank loans and credit facilities.
“Limiting liquidity in the financial system does not improve productivity, i.e. food production, which is the primary cause of inflation in Nigeria.
Furthermore, only about 12% of the total money in circulation is in the banking system, leaving the remaining 88%, or about N3.2 trillion, outside the banking system.
“So, this measure would be counterproductive because it does not address the intended goal of managing the money supply.
“These new measures will worsen the fragile economy because the supply of funds for the real sector will dry up, and the new MPR rate hike will push loan interest rates above 30%, making it very difficult for real sector operators, particularly manufacturers and SMEs, to repay; resulting, obviously, in increased bad loans and worsening the nation’s economic situation.”
The former governor stated that the most important way for Nigeria’s government to manage the country’s high inflation rate and decline in production is to address insecurity.
Obi stated that the government’s response to insecurity would allow for increased food, crude oil production, and overall production, resulting in cheaper products, particularly food.
Obi added, “This way, we would increase our productivity while also restoring FDI and FPI confidence in the country.
“I must warn that what the Nigerian economy requires right now is hard-headed practical innovation and outcomes. Tinkering with classical economic theories will only exacerbate our crisis.”
NNPC Ltd, OPEC Pledge Collaboration To Attract Investments, Increased Production
The Nigerian National Petroleum Company Limited (NNPC Ltd) and the Organisation of Petroleum Exporting Countries (OPEC) have agreed to work closely together to achieve the country’s objectives of attracting investment and increasing production.
In a statement, Olufemi Soneye, Chief Corporate Communications Officer of NNPC Ltd, stated that the two organizations came to this accord when the Secretary General of OPEC, Haitham al-Ghais, paid a courtesy visit to the Group Chief Executive Officer of NNPC Ltd, Mr. Mele Kyari, at the NNPC Towers on Wednesday.
Speaking at the event, al-Ghais stated that OPEC was completely aligned with NNPC Ltd.’s vision, as encapsulated in its payoff line: “Energy for Today, Energy for Tomorrow,” because of its inclusive view of energy, as opposed to the view promoted by some quarters that some sources of energy were bad.
He revealed that, despite the pushback on oil and gas, the world would require approximately $14 trillion in investments from now until 2035 to meet global demand, and urged NNPC Ltd to do everything in its power to capitalise on that opportunity to increase production in order to remain a reliable source of energy for the world.
“We will continue to ensure that the market is stable. The global market has to be stable in order for Nigeria to be able to attract investors. If there’s volatility, if there’s no stability in the market, it will only create havoc for everybody, whether it’s a producer or consumer country. So, we will continue to do that in OPEC. We count on Nigeria’s support”, the OPEC helmsman said.
In his remarks, Kyari stated that NNPC Ltd was working extremely hard to recover lost production and create the ideal fiscal environment to attract investment.
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