Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun and his counterpart in the Ministry of Budget and Economic Planning, Senator Abubakar Atiku Bagudu, on Wednesday, defended the borrowing plan of the President Bola Ahmed Tinubu administration, as proposed in the 2024 appropriation bill.
The ministers, who spoke with journalists in Abuja shortly after the budget presentation to a joint session of the National Assembly by Tinubu, said the arrangement was the best way to go.
Their submissions were also supported by some opposition federal lawmakers, who described the budget as the solution to the country’s current economic challenges.
Edun said, “It is a good thing to borrow efficiently, sensibly and sustainably. What we need to look at is that borrowing is down and the deficit is also down. It’s just about three per cent of the GDP.
“That is a major move in the right direction to reduce dependence on borrowing and stabilise the economy.
“We are definitely going in the right direction as far as this budget is concerned. It will guarantee economic stability of government finances and the economy as a whole.”
Bagudu expressed confidence that the Tinubu administration would ensure adequate implementation of the 2024 budget.
He said, “I have no doubt that the 2024 budget proposal, once passed by the National Assembly and assented to by the president, will be implemented properly.
“The deficit of N9 trillion may sound high but if you compare it to that of last year, which is over N13 trillion, this is a significant milestone because it has absolutely lower deficit.”
Equally on Wednesday, Edun stated that the N27.5 trillion 2024 budget proposal was predicated on realistic assumptions and would be successfully implemented.
In his remarks at the public presentation of the 2024 budget proposals in Abuja, Edun said the budget parameters were based on empirical projections, explaining that more emphasis would be placed on expenditure management.
He noted the 2024 fiscal document was prepared to stabilise the economy, and ensure less reliance on borrowing. To underscore this, the minister explained that debt to Gross Domestic Product (GDP) had been slashed from 6.1 per cent in 2023 to 3.88 per cent in 2024.
He added that the key focus was to increase tax-to-GDP from under 10 per cent currently to about 18 per cent in the next few years.
The minister said the budget was intended to engender a stable macroeconomic environment, where local and foreign investors were expected to come in.
He said, “The budget is N27.5 trillion and what I think is critical is that this budget is based on assumptions, which are realistic. It is based on projections, which I think is okay to the average person and reasonable. Therefore, it is something that we can expect to be successfully implemented.
“The breakdown of different elements shows the direction of this administration in order to stabilise the Nigerian economy for rapid inclusive growth. There is going to be less reliance on borrowing.
“The budget deficit is being brought down to about 6.1 per cent to GDP to 3.88 per cent of GDP. That is a huge change in direction from unlimited borrowing to focusing on revenue and expenditure management. There will be value for money on expenditure and increase revenue.
“The key target is to increase tax to GDP from under 10 per cent to 18 per cent in a couple of years. That target, a hugely ambitious one, is what we need to meet to reduce reliance on borrowings.
“Likewise debt service as a proportion of revenue is expected to fall. The budget is rallying up the economy for domestic and foreign investment to come in and this would be achieved through public private partnerships and even privatisation are mentioned in this budget.”
Presenting a breakdown of the budget proposal, Bagudu stated that the N27.5 trillion “Budget of Renewed Hope” had a significant allocation of N2.18 trillion or 7.9 per cent to education.
He stated that besides the N10 billion earlier approved for the Student Loan Fund in the N2.17 trillion Supplementary Budget, another N50 billion had been provided for the fund in the 2024 appropriation.
He also disclosed that a total of N3.25 trillion was provided for defence in the 2024 budget proposals, an amount covering the recurrent expenditure of the military, police, intelligence and paramilitary.
According to him, the health sector attracts five per cent or N1.33 trillion of the 2024 appropriation, with N1.07 trillion of the amount going for capital and recurrence of the Federal Ministry of Health and its agencies.
The sum of N1. 32 trillion is for Infrastructure, including provision for works and housing and power, he said.
Bagudu stated that the N27.5 trillion aggregate budget had a non-debt recurrent expenditure of N9.92 trillion, while debt service was projected to be N8.25 trillion, and capital expenditure, N8.7 trillion.
Earlier in his remarks, Director General, Budget Office of the Federation (BoF), Ben Akabueze, offered explanation for the delayed presentation of the budget.
Akabueze gave the rigorous process of power transition as the reason for the delayed presentation of the budget.
He stated, “Some have already wondered why the budget for this year appears delayed relative to the timeline we have achieved over the last few years.
“But in context, this is a transition year from one government to another. The last time we had a transition year was in 2015 and the budget was not presented until mid-December, one month later than we are doing now.
“So it is normal to expect the new administration to settle down. The budget is arguably the government’s most important economic statement every year.”
An opposition federal lawmaker, Hon. Pascal Agbodike, representing Ihiala Federal Constituency of Anambra State, who is also Chairman, House Committee on Hydroelectric Power Producing Development Commission (HYPADEC), expressed hope in the 2024 budget as presented by Tinubu.
Agbodike told journalists on Wednesday that his committee was ready to begin bilateral interactions with the heads of MDAs
He said, “After the budget presentation, it is the role of the legislature to scrutinise the estimates and interface with heads of the MDAs to know if it represents the interest of Nigerians.
“From the opposition point of view, being a member of the All Progressives Grand Alliance, we promise the country that we shall continue to be constructive and objective in our legislative activities.
“Looking at the way this government is going, they are still doing very well and we shall support them.
“I am so much impressed by what we have seen today listening to the president while presenting the budget
“With the cooperation of Nigerians and that of the National Assembly, this government can do very well.”
A member of Peoples Democratic Party (PDP) and Chairman, House Committee on Petroleum Resources (Downstream), Hon. Ikenga Ugochinyere, said the president had allayed the fears of Nigerians regarding the borrowing plans.
Ugochinyere stated, “The president has pledged that he will carry out tax reforms and increase revenue generation so that the country, in the long term, would not need to borrow much again.
“More importantly, he has increased the capital projects considerably, which means there would be infrastructure revolution
“He also promised to reform the social intervention programme by making it transparent and to be directly distributed to residents of both the rural and urban areas.
“So, there is hope in the budget that the president had presented before us today.”
Ndubuisi Francis and Sunday Aborisade
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