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| Comercio Partners Research has released a succinct yet comprehensive overview of the key highlights and strategic implications arising from President Bola Tinubu’s presentation of Nigeria’s 2024 budget to the joint session of the National Assembly. In his inaugural budget presentation since assuming office in May 2023, President Tinubu outlined a fiscal plan that not only builds on the economic foundations laid by his predecessor but also introduces nuanced strategies to address evolving challenges and opportunities in the national economy. This summary encapsulates critical facets of the budget, ranging from its ambitious financial targets and economic growth projections to the proposed borrowing plans and the administration’s commitment to social investment and fiscal responsibility. |
Budget Overview: President Tinubu presented a robust budget totaling N27.5 trillion, marking a significant 26% increase compared to the 2023 budget presented by former President Muhammadu Buhari. The Federal Government plans to spend 2% of its 2024 budget on poverty reduction and social development. |
Adjustments and External Borrowing: Originally proposed at N26.1 trillion, the budget saw a subsequent upward adjustment of N1.5 trillion, attributed to heightened oil prices and a reduced naira exchange rate. Additionally, the President has requested approval for an external borrowing plan of $8.6 billion and €100 million to fund strategic infrastructure projects. |
Economic Focus: Themed “Budget of Renewed Hope,” the budget underscores the administration’s commitment to achieving job-rich economic growth, macroeconomic stability, and an enhanced investment environment. The plan prioritizes increased human capital development, poverty reduction, and improved social security access. |
Security and Stability: A paramount focus is placed on defence and internal security, to bolster safety for citizens, protect property, and secure investments across the nation. Security allocation dominates the budget, getting the largest share of 12% (about N3.25 trillion), due to the security challenges in the country. The infrastructure budget gets only a 5% allocation (about N1.32 trillion) despite the huge infrastructure deficit in the country. |
Financial Benchmarks: Key financial benchmarks include an oil price benchmark of $96 per barrel, a daily oil production estimate of 1.78 million barrels, and an exchange rate fixed at 750 Naira to 1 US Dollar for the fiscal year 2024. |
Debt Management and Fiscal Responsibility: The budget outlines a prudent approach to debt management, with projected debt service accounting for 45% of expected total revenue. The budget deficit is projected to be around N18 trillion, representing 3.88% of GDP, a notable improvement from the 2023 deficit. |
Borrowing Strategy: To finance the deficit, the government plans a strategic borrowing approach, encompassing N83 trillion in borrowings, 298.49 billion Naira from privatization proceeds, and a N1.05 trillion Naira drawdown on multilateral and bilateral loans. |
Social Investment and Tax Policies: President Tinubu highlights the expansion of social investment programs, particularly the National Social Safety Net project, aimed at providing targeted cash transfers to impoverished households. The government is also actively reviewing tax and fiscal policies to increase the revenue-to-GDP ratio from below 10% to 18%. |
Economic Outlook and Prosperity: The administration anticipates a minimum of 76% economic growth, exceeding the global average forecast. Inflation is projected to moderate to 21.4% in 2024. President Tinubu reaffirms the government’s commitment to fostering general economic prosperity through improved social investment programs and measures to contain financial leakages. |
