- ‘FG expenditure exceeds revenue by N4.5trn’
- Tinubu shifts budget presentation to Wednesday
The Federal Executive Council has approved the 2025 budget totaling N47.96 trillion.
The budget is scheduled for presentation to the National Assembly on Wednesday.
The Minister of Information and National Orientation, Mohammed Idris, while briefing State House journalists after the meeting presided over by President Bola Tinubu, said the Presidency was engaging with the National Assembly to approve the budget submission on Wednesday.
The FEC meeting also discussed the 2024 budget performance.
The meeting also approved oil production of 2.06 million barrels per day on the back of significant gains in security to support domestic production.
There is a capital component of 33 percent, amongst the other assumptions.
The 2025 budget was approved on November 14 by the FEC, subject to the passage of the 2025-2027 Midterm Economic Frameworks (MTEF/FSP) by the lawmakers.
The Minister of Budget and Economic Planning, Atiku Bagudu, confirmed that all the grey areas have been addressed, noting that the President is now set to lay the budget before the National Assembly for consideration and passage within the next 48 hours.
He disclosed that the 2025 budget has a revenue projection of N34.820 trillion, expenditures of N47.960 trillion.
He also revealed that under the 2024 budget, the Federal Government had a revenue of N14.55 trillion or 75 percent performance in revenue as at September, 2024, with the hope that it would do better by the end of the year.
Bagudu earlier gave a breakdown of MTEF for 2025 to 2027 in line with the Fiscal Responsibility Act of 2007, which has since been passed by the National Assembly.
In line with the 2007 fiscal Responsibility Act, the framework projected Gross Domestic Product GDP growth rate of 4.6 percent and crude oil price of $75 per barrel, as well as an exchange rate of N1400/$ and oil production of 2.06 million barrels per day.
It was also gathered that the budget was delayed to allow the National Assembly complete its work on the MTEF/ FSP.
In approving Tinubu’s MTEF/FSP, the Senate projected oil benchmark prices at $75, $76.2 and $75.3 per barrel for 2025, 2026 and 2027 respectively.
The Senate also approved an exchange rate of N1, 400/$ for 2025, 2026 and 2027 respectively.
The Senate likewise approved crude oil production of 2.06 million bpd, 2.10 million bpd and 2.35 million bpd for 2025, 2026 and 2027, respectively.
The upper legislative chamber also approved a projected GDP at a growth rate of 4.6 per cent, 4.4 per cent, and 5.5 per cent for 2025, 2026 and 2027, with projected inflation rates 15.75 percent, 14.21 percent, and 10.04 percent for 2025, 2026 and 2027 respectively.
The 2024 budget of ‘Renewed Hope,’ as presented by President Bola Tinubu, had a total expenditure of N27.5 trillion (equivalent to $36.7 billion), with a projected revenue of N18.32 trillion ($24.4 billion) and a deficit of N9.18 trillion ($12.2 billion).
To achieve the projected revenue, the Federal Government had also estimated oil revenue at N7.68 trillion, with Government Owned Enterprises tasked with the responsibility of contributing N4.07 trillion.
In the 2024 budget, non-oil taxes were projected to contribute N3.52 trillion, while independent revenue was set at N1.91 trillion. Minerals and mining accounted for N4.55 billion, while other revenue sources were estimated at N1.13 trillion.
A further breakdown showed that the expenditure breakdown comprised a non-debt recurrent expenditure of N9.92 trillion, a capital expenditure of N7.72 trillion (exclusive of transfers), debt service of N8.25 trillion, a statutory transfer of N1.37 trillion, and a sinking fund of N243.66 billion.
FG expenditure exceeds revenue by N4.5trn– Report
Meanwhile, a new report from the Budget Office has indicated that the Federal Government’s expenditure exceeded its accrued revenue in the first six months of 2024, resulting in a budget deficit of N4.53trn.
The deficit spending was driven by a 73.91 per cent increase in its expenditure which moderated the impact of improved revenue receipt of N8.70trn between January and June 2024.
An analysis of the newly released second-quarter budget implementation report revealed that the deficit was 29.85 per cent higher than N3.488trn recorded within the review period in 2023, but was N59.55bn (1.30 per cent) below the projected half-year deficit of N4.589trn.
It stated the amount was financed through domestic borrowing, increasing the nation’s debt profile.
Economic analysts have expressed concerns about the nation’s debt sustainability, emphasizing the urgent need to diversify its revenue base.
In simple terms, a fiscal deficit happens when a government’s spending exceeds its revenue from taxes and other sources. It means the government is spending more money than it’s bringing in.
To cover this gap, the government often borrows money, which can lead to an increase in public debt.
This shortfall also signals a greater reliance on borrowing to finance the growing expenditure, raising concerns about the long-term fiscal sustainability and potential impacts on national debt levels.
During the 2024 budget presentation, the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, highlighted plans to reduce the budget deficit to N9.18trn or 3.88 per cent in line with the threshold set by the Fiscal Responsibility Act 2007.
He said this would be achieved by implementing a variety of strategies, including a thorough review of recurrent expenditures, prioritising essential spending and eliminating wasteful or unproductive expenditures, streamlining administrative processes, reducing travel costs, and consolidating certain functions.
However, a breakdown of the implementation report indicated a different scenario.
The report read, “The revenue and expenditure outturn of the Federal Government resulted in a fiscal deficit of N4.529trn in the first half of 2024. This was N59.55bn (1.30 per cent) below the projected half-year deficit of N4.589trn. It was also higher than the N3.488trn deficit that was recorded in the first half of 2023. The deficit was financed through domestic borrowing of N4.529trn.
It added, “The sum of N8.702trn was received to fund the FGN budget in the first half of 2024. This comprises N2.715trn (31.20 per cent) oil revenue and N5.987tn (68.80 per cent) non-oil revenue. Revenue receipts increased from N3.586trn in the first quarter to N5.115trn in the second quarter. However, the total inflow for the first half of the year was N1.097trn (11.20 per cent) lower than the 2024 half-year projection of N9.799trn but N4.582trn (112.22 per cent) higher than the N4.119trn reported during the first half of 2023.
