National Assembly begins debate on 2024 budget despite debt servicing concerns

Following Wednesday’s presentation of the 2024 budget to a joint session of the National Assembly by President Bola Tinubu, lawmakers, yesterday, began debate on general principles of the N27.5 trillion proposal.

At the floor of the upper legislative chamber, Senator Binos Yaroe (PDP-Adamawa) faulted the fire brigade approach deployed by Bola Tinubu to ensure the budget is passed within a month.

Yaroe, who said Tinubu was not fair to the National Assembly, lamented that the President brought the budget to the Assembly late and, yet, expects lawmakers to do a thorough job within a few weeks.

According to him, the executive took months to put the budget together but expects the National Assembly to consider and pass it in a matter of weeks, just to maintain the January-December budgetary circle.

On his part, Senate Leader, Bamidele Opeyemi, described the N9.9trillion recurrent expenditure as too high because it constitutes 43 per cent of the budget.

He said total fiscal operations of the Federal Government would result in a N9.8 trillion deficit, representing 3.88 per cent of estimated GDP. He said this was above the three per cent threshold set by the Fiscal Responsibility Act, 2007.

Opeyemi noted that highlights of the budget include oil price benchmark of $77.96 per barrel and daily oil production estimate of 1.78 million barrels of condensates of 300,000 to 400,000 barrels per day and exchange rate of N750 to dollar.

He said based on fiscal assumptions and parameters, total federally collectible revenue was N16.87 trillion in the budget, while total federally distributable revenue was N11.09 trillion

Opeyemi said total revenue available to fund the 2024 budget was N9.73 trillion, which included revenue from 63 government-owned enterprises, while oil revenue was projected at N1.92 trillion, with non-oil taxes at N2.43 trillion among others.

He said to finance the deficit would result in new borrowings totaling N7.83 trillion, in addition to N294.49 billion expected from privatisation.
He said the deficit would also be financed from N1.06 trillion drawn from bilateral, multilateral loans secured for specific development projects.

At the House of Representatives, Majority Leader, Julius Ihonvbere, said the ‘Budget of Renewed Hope’ had been crafted to address insecurity and strengthen the economy, among other concerns. Ahmed Jaha (APC-Borno), in his contribution, noted that timely release of funds would enable full implementation of the budget. This was as Usman Kumo (APC-Gombe) said the most interesting aspect of the President’s presentation was the priority given to security.

Sada Soli (APC-Katsina) described the resolve of the President to block leakages as vital, saying there was a need to address problems in Integrated Payroll and Personnel Information System (IPPIS) over costs. On his part, Bello El-Rufai (APC-Kaduna) argued that the key to reducing westernization in government was implementation of Oronsaye Report.

The debate is to continue at the next plenary session on Tuesday.President Tinubu had explained that based on parameters and fiscal assumptions, recurrent expenditure will gulp N9.92 trillion; capital expenditure, N8.7 trillion; deficit, N9.18 trillion; and debt servicing, N8.25 trillion.
MEANWHILE, an economist, Prof. Akpan Ekpo, cautioned the Federal Government against using a significant portion of the budget on debt servicing, saying it could negatively impact the country’s long-term economic growth and prosperity.

Ekpo, a former Director General of the West African Institute for Financial and Economic Management (WAIFEM), gave the advice in an interview with News Agency of Nigeria (NAN) in Lagos, yesterday.

He said there should be investment in infrastructure and other development projects that would generate long-term benefits for the economy. Ekpo said: “You know the budget speech, including the appropriation, are all estimates and intentions. So, if those things are implemented, the economy will grow. But, don’t forget that growth is not development; you can grow and not develop.

“My worry is that what the Federal Government is spending for debt servicing is almost the same amount it is spending for capital projects. So, debt servicing is a big problem. If I were the government, I would talk to my debtors and rearrange the debt matter because they are spending almost the exact amount for debt servicing and for capital projects.”

Ekpo also urged the government to reduce the cost of governance to enable it to finance development projects. He said: “There is no evidence of a specific way of reducing cost of governance; we keep talking about revenue, how about governance? Cost of governance is very high. If we can reduce that, then we can accommodate revenue to finance all those projects; otherwise for now, we will just wait and see.”

The economist was optimistic that the National Assembly would perform its oversight function, study the budget critically, and ensure that quarterly reports are provided whenever the budget becomes a law.

The 2024 proposal of N27.5 trillion is 26 per cent higher than the 2023 budget presented by former President Muhammadu Buhari in 2022. The President also wrote to the National Assembly, seeking the approval of an $8.6 billion and €100 million external borrowing plan for critical infrastructure in areas such as power, roads, water, railway, and health.

Also, some stakeholders in the oil and gas industry have commended Tinubu for pegging crude oil price at $77.96 and the naira at N750/$1. They gave the commendation in separate interviews in Lagos.

Olukayode Akinrolabu, a research fellow (Science & Technology Educational Research Group) (STERG), Faculty of Education, Lagos State University, Ojo, said the 2024 budget of N27.5 trillion is a step in the right direction.

Akinrolabu said attendant projections for increase in GDP, employment and macro-economic appreciation were all fascinating indices for appraising and adjudging the President’s policy on oil production level and international market price.

According to him, the new rates are slightly higher than the previous $75 per barrel and 1.69 million barrels per day for 2023. He said: “The increase or appreciation rate is approximately 5.25 per cent. The slight raise projection might not be far from the ongoing crusade against oil theft and the exploit of appreciable success in that drive.”

Akinrolabu, however, believed that intensifying the ongoing crusade against oil theft would further culminate in appreciable gain in oil production and price, subsequently.

He added: “That’s the way to go. It is a pragmatic compendium of decision in the whole gamut. A whole lot was factored into the projection, I suppose. An expository analysis will suffice in this regard. The carrying capacity cumproduction capacity of the refineries is strong indication to back up this projection.

An oil and expert, Henry Adigun, said the $77.96 crude oil price benchmark is reasonable He said: “What I am not sure about is projected outputs. That might be unrealistic and unattainable. And the exchange rate, I am not very optimistic about that. The inflow to make that happen only exists within a loan and should not be the basis for setting a target for the exchange rate.”

A former Chairman, South West Zone, Independent Petroleum Marketers Association of Nigeria (IPMAN), Olumide Ogunmade, commended Tinubu on the budget presentation. Ogunmade said the Ukraine/Russia war and Middle East tension makes the $77.96 benchmark figure realistic.