Nigeria’s government proposed the sum of N26.01 trillion for the 2024 fiscal year, the Federal Executive Council 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 disclosed this at the end of the Council meeting presided over by President Bola Tinubu. Compared to the 2023 budget which is N21.83 trillion, the proposed budget is the largest yet in Nigeria’s history.
While a larger budget can potentially stimulate economic growth and address pressing issues, it also raises questions about fiscal responsibility and sustainability. It is crucial for the government to ensure that this increased spending translates into tangible benefits for the people. It is crucial to investigate how effectively the government plans to manage and use these funds, considering its issues of corruption and inefficiency.
Bagudu said that the FEC made assumptions regarding the reference price for crude oil at $73.96, an exchange rate of $700 with oil production of 1.78 million barrels per day. It also includes the debt service of N8.25 trillion, a GDP growth rate of 3.76 percent at an inflation rate of 21 percent.
The accuracy and feasibility of these assumptions play a pivotal role in determining the performance of the budget. It is imperative to evaluate whether they are realistic or overly optimistic, especially given the volatile nature of the global oil market.
Nigeria’s increasing debt levels have been a subject of concern, as excessive borrowing can lead to debt sustainability issues. It is imperative for the government to outline a clear strategy for managing debt and ensuring that debt servicing does not continue to be a burden on future budgets.
The projected growth and inflation rates raise questions about the government’s ability to manage the economy effectively. Inflation erodes purchasing power and can lead to adverse economic consequences. Achieving such growth while controlling inflation is a challenging undertaking, and the government’s strategy to realize these targets should be critically scrutinized. A comprehensive plan to control inflation and achieve sustainable economic growth is critical.
The heavy reliance on oil revenue underscores the importance of diversifying Nigeria’s income sources. The government should focus on reducing this dependence by promoting sectors such as agriculture, manufacturing, and services to build a more resilient and sustainable economy.
President Bola Tinubu has faced rising pressure to ease the economic hardship in the country, exacerbated by his decision to eliminate petrol subsidy. This move led to a threefold increase in fuel prices and a depreciation of the naira by over 50%, resulting in a major surge in prices within Africa’s leading oil-producing nation.
The naira’s depreciation by more than 50% is a double-edged sword. While it can make exports more competitive and attract foreign investment, it can also lead to imported inflation, as the cost of imported goods and services increases. This, in turn, can further contribute to the inflation crisis.
It is vital to consider the long-term consequences of these measures. While addressing inflation is necessary, the abrupt removal of subsidies and serious currency depreciation can have social and economic repercussions. Additionally, the government should consider a broader economic reform strategy to promote sustainable growth and reduce the reliance on oil.
Source: Venturesafrica
