Nigeria’s 2024 budget and the debt constraints

Against the backdrop of a slowing economic growth occasioned by multiple economic indicators, Nigeria’s debt profile continues to rear its ugly head in the N27.5 trillion budget; BENJAMIN UMUTEME writes.

The N27.5 trillion federal government’s 2024 budget was prepared against the backdrop of a challenging global and domestic economic environment.

Analysts say prevailing global environment has been characterised by a slowing global growth; persistent inflationary pressures prompting monetary tightening with the inherent negative impact on capital inflow to emerging markets economies; constrained investment spending; supply-chain disruptions; and rising geo-political tensions, including the Russia and Ukraine war, with severe implications on global food and energy prices.

Coming down to the domestic side, domestic revenue mobilisation challenges; public debt sustainability concerns; elevated inflation; challenging domestic business environment – infrastructure, foreign exchange, exchange rate etc; and negative impact of insecurity on the domestic economy, have further combined to blur Nigeria’s fiscal outlook.

At the budget presentation, President Bola Ahmed Tinubu stated that “in preparing the 2024 budget, our primary objective has been to sustain our robust foundation for sustainable economic development. A critical focus of this budget and the medium term expenditure framework is Nigeria’s commitment to a greener future.”

“Emphasising public-private partnerships, we have strategically made provisions to leverage private capital for big-ticket infrastructure projects in energy, transportation and other sectors. This marks a critical step towards diversifying our energy mix, enhancing efficiency, and fostering the development of renewable energy sources,” he said.

The budget was predicated on the following assumptions of oil price benchmark at 77.96, oil production at 1.78, exchange rate at 750 to a dollar, inflation rate at 21.40, and GDP growth rate at 3.76.

However, financial experts have said that the assumptions do not match current realities on ground.


In a chat with Blueprint, the managing director of SD&D management Limited, Gabriel Idakolo, said some of the budget assumptions did not capture the realities of the country.

According to Idakolo, the exchange rate and oil production assumptions were way below reality taking into consideration the exchange rate and current oil production.

“The budget titled renewed hope is a 27.5 trillion budget that will be partly financed by borrowing. The president clearly highlighted his key areas of focus in the budget to include: internal security, agriculture, education especially revamping tertiary education and student loan, intention to focus more on PPP (Public Private Partnerships) and most especially increasing the oil and gas sector opportunities for the economy.

“The budget as presented deviated a little from my expectations because there is still deficit financing of over 7 trillion of the budget although lower than the deficit recorded in 2023.

“The budget assumptions of N750/ $1, daily crude oil production of 1.78mbp in 2024 are not realistic looking at the present position of US dollar to Naira and the daily crude oil production which has not been over 1.2mbp for the past 24 months,” he said.

Economist Adefolarin Olamilekan told this reporter that debt continues to be the only method to fund the budget. This, according to him, continues to hamper the federal government from fully implementing its plan.

For Adefolarin, Nigerians anticipate a working budget that would transform their lives but most times, implementing it has always been fraught with challenges.

For Bismarck Rewane, the chief executive officer (CEO) of Financial Derivatives Company Limited, old unrelenting challenges may conspire to hamper the workability of the budget.

He said, “Nigerians care more about food prices stability than the budget figures. The proposed budget hopes to achieve job-rich economic growth (3.76%), price stability (inflation: 21.4 per cent, exchange rate: N750/$ per cent), a better investment environment, and poverty reduction.

“However, these ambitious budget numbers are anything but close to the reality of the average Nigerian, who cares less about budgetary arithmetic if the prices of major staples like bread and rice don’t decrease.”

Recurrent expenditure against capital expenditure

Adefolarin, who is a development researcher, noted that even the budget for capital expenditure was again being overshadowed by recurrent expenditure.

The federal government had budgeted the sum of N8.25 trillion and N243 billion for debt service and Sinking Fund to retire maturing bonds issued to local contractors/creditors respectively.

According to Adefolarin, the federal government continues to budget huge amounts for recurrent expenditure as against capital expenditure that would aid the economy.

“And what this means is we are budgeting for frivolous expenditure that would not support the economy in concrete ways.

“Although the non-debt recurrent expenditure is on a positive side, not as the level that putting much more into capital expenditure would impact the economy, as capital projects like roads, health facilities, water provision, bridges, electricity and others would span economic activities across the country.

“We need to break away from this high non debt recurrent expenditure and give way for funding of the critical sector of the economy through capital provisions,” he said.

Way forward

Analysts say debt levels can be a challenge for developing economies like Nigeria as they can create economic instability and affect the ability of governments to provide essential public services. They noted that to navigate the debt trap, the federal government must ensure fiscal discipline; roll out growth-oriented policies; restructure its debt, and improve its revenue collection amongst several others.

They opine that the federal government must address the issue of tax generation and administration to ease the urge to dive into borrowing.

For Idakolo, increasing the Tax to GDP ratio from its current less than 10 per cent to about 18 per cent would be a move in the right direction.

“The implementation of the social safety net programme and sincerity in blocking financial leakages will strengthen economic development and reduce poverty.

“The overall implementation of the budget will determine if it will capture the realities before Nigerians because most of the budget head that funds have been earmarked are historically not always fully implemented due to revenue constraints and other inhibitory factors,” Idakolo said.

While Adefolarin urged the government to show greater concern towards capital expenditure funding as this is leeway out of our infrastructure deficit.

He insisted that the Tinubu administration must not over rely on tax as the only measure to improve government revenue noting that government owned enterprises must show commitment to be accountable in all their ventures.

“Similarly, we must address our profligacy for borrowing that led the country into a huge debt profile. And we believe the government can tackle this by reviewing the sector these borrowed money goes into and rethink it. Also, long term security bills are also adding to our debt. What we are saying is that all channels of borrowing by the government need a rethink of domestic, foreign, multilateral or bilateral as well as treasury bills,” Adefolarin said further.