Measures will crash shortfall from 6.11% to 3.88% of GDP
Senate, House begin debate on N27.6 trillion estimates
Budget brilliant, says Sen. Jimoh Ibrahim
A number of measures have been adopted by the Federal Government to reduce the budget deficit by nearly half.
This action, which will involve a combination of fiscal, economic and accounting strategies, is expected to lead to the blocking of leakages and the redirecting of financing to long-term economic growth.
Nigeria’s budget deficit stands at 6.11 per cent of the Gross Domestic Product (GDP).
A new comprehensive revenue generation and management strategy is expected to cut the budget deficit to 3.88 per cent.
The new strategy is a major anchor of the N27.5 trillion budget proposal, which debates started yesterday at the two chambers of the National Assembly.
President Bola Tinubu had on Wednesday presented the first full budget of his administration.
The target is to close the deficit gap to within the threshold of three per cent set by the Fiscal Responsibility Act 2007.
With declining revenues and stubbornly high expenditures, especially recurrent expenditures, Nigeria’s budget deficit had widened over the years, significantly above the guide set by extant laws.
The budget deficit in 2024 is projected at N9.18 trillion or 3.88 per cent of GDP. In 2023, the budget deficit was N13.78 trillion, some 6.11 per cent of GDP.
Minister of Finance and Coordinating Minister for Economy, Mr. Wale Edun outlined the comprehensive strategy that will underpin the implementation of the 2024 budget, with the overall objectives of reducing deficit, enhancing revenue and locking in significant values into expenditures.
To achieve these objectives, the government will be implementing a variety of strategies, including a thorough review of recurrent expenditure, prioritising essential spending and eliminating wasteful or unproductive expenditures.
These may include streamlining administrative processes, reducing travel costs, and consolidating certain functions.
Also, there will be an efficient allocation of capital expenditure which is crucial for driving economic growth.
The government will prioritise capital projects that have a high impact on productivity, job creation, and infrastructure development. These include investing in energy, transportation, and other critical sectors.
In the area of revenue generation, the government will expand the tax base by identifying and incorporating new sources of revenue, such as the informal sector and digital transactions.
These may involve simplifying tax laws, improving tax administration, and implementing targeted compliance measures.
The government will also improve tax collection efficiency to maximise revenue generation while investing in technology, strengthening tax administration systems, and enhancing taxpayer education to improve compliance and reduce tax evasion.
Also, the government will explore alternative revenue sources beyond traditional taxation, such as asset monetisation and privatisation, public-private partnerships, and targeted fees for specific services.
The government will incentivise investment and economic growth by implementing tax breaks or other incentives for priority sectors.
These strategies are expected to attract domestic and foreign investments, thus fostering job creation and economic expansion.
The government plans to collaborate with state and local governments to enhance tax administration coordination, reduce tax leakages and eliminate multiple taxation. This collaboration will streamline tax collection, improve compliance, and optimise revenue generation.
Edun, highlighting the breakdown and major underlining principles of the 2024 budget, said the new budget proposal marked a pivotal shift from a trend of excessive borrowing to a focus on prudent financial management.
He said with careful strategic implementation, the government will achieve the key budget proposals, noting that they are all realistic and practicable.
According to him, there is a need to realign revenue and expenditure management to deliver optimal value for money.
He noted that by prioritising effective financial management, the government aims to instil confidence among investors and citizens in its fiscal policies.
“The 2024 budget focus will be on value for money and raising the economy. The budget deficit is being brought down from about 6.11 per cent of GDP to 3.88 per cent of GDP.
“That is a huge change in direction from unlimited and limitless borrowing to re-focussing on revenue and expenditure management to give value for money,” Edun said.
The target, he said, is to increase Tax-to-GDP from roughly under 10 per cent to 18 per cent in a couple of years.
“That target is a hugely ambitious one which we need to meet to reduce reliance on borrowing,” Edun said.
According to him, the government’s commitment to fiscal prudence and responsibility is underscored by the multifaceted plan aimed at steering the nation towards a more balanced and robust economic future.
He noted that the new budget implementation and philosophy would position the economy for foreign investors to come into the country through private partnerships.
“There is privatisation in the budget. That is the direction of travel to create a stable macroeconomic environment in which investors can come in.
“The government is yielding grounds to them and allowing them to come in and invest and provide goods and services to Nigerians,” Edun said.
National Assembly begins debate
The National Assembly yesterday began a debate on the general principles of the 2024 Appropriations Bill.
