The Federal Executive Council (FEC), on Monday, approved a 2024 budget of N27.5 trillion.
This followed the review of the Medium-Term Expenditure Framework earlier passed by the National Assembly which benchmarked the exchange rate at N700 to $1 and crude oil price at $73.96 cent per barrel.
Briefing State House Correspondents shortly after the FEC meeting at the Presidential Villa in Abuja, the Minister of Budget and Economic Planning, Abubakar Bagudu, said it revised the MTEF and the Fiscal Policy to use an exchange rate of N750 to $1 and also a benchmark crude oil reference price of $77.96 per barrel.
According to Bagudu, the FEC also approved an Appropriation Bill for 2024 with an aggregate expenditure of N27.5 trillion, an increase of over N1.5 trillion from the previous estimate.
He also noted that using the old reference prices, the forecast revenue is now N18.2 trillion which is higher than the 2023 revenue, including that provided in the two supplementary budgets, in which the deficit is lower than that of 2023.
Tax Exemptions
Meanwhile, the FEC was briefed by the Fiscal Policy and Tax Reform Committee on its workings for roughly 90 days.
Addressing journalists, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the committee had proposed the removal of VAT on diesel and is looking to increase the ratio of tax revenue to GDP to 18 percent, which is the average for Africa.
He also gave an update on the $100 million financing from the African Development Bank (AfDB) and $15 million from the Canada African Development Bank Climate Fund (CACF) inherited from the previous administration.
According to him, it is a concessional borrowing of around 4.2 percent per annum by Abia state through the federal government.
He said the funds are for waste management and rehabilitation of roads in Abia State.
Furthermore, Edun said the African Development Bank approved $1 billion concessional financing for Nigeria with a moratorium of eight years, at about 4.2 percent per annum, in recognition of the economic measures that have been taken and the swift movement towards macro stability.
He said the loan to be paid in 25 years at 4.2 percent per annum, has a moratorium of eight years
He said the AfDB, a concessional financing organisation, is to provide $1 billion in general budget support.
“The Federal Executive Council has also approved a total limit of N2 trillion to be available for use by the Ministry of Finance in order to go in and out of the market and essentially to, where possible, bring down the rate of interest on the current outstanding,” Edun explained.
“The view is that there will be an opportunity to save about 50 billion naira or more in debt servicing over time by giving back expensive debt refinancing it with cheaper funding.”