In a recent disclosure, the Federal Government of Nigeria has outlined its budget allocation for the year 2024, earmarking a significant portion for personnel and debt service expenditures. The 2024 budget, totaling N26.01tn, allocates 61.63% of these funds to cover personnel costs and debt servicing, according to information obtained by Findwhosabi.
The breakdown of these allocations reveals that N7.78tn will be directed towards personnel and pension costs, while N8.25tn will be allocated for debt servicing. This combination accounts for a substantial N16.03tn of the total budget, exceeding 60% of the entire allocation. Notably, the government’s debt servicing expenses will surpass its expenditure on salaries and pensions.
The allocation for personnel and pension costs is set to rise from N5.87tn in 2023 to N7.78tn in the 2024 budget, reflecting a 32.54% increase or N1.91tn. This increase is occurring amid concerns about the need to reduce the cost of governance.
Debt service costs are also expected to see a substantial rise, with a 30.74% increase from N6.31tn in 2023 to N8.25tn in 2024. This allocation shift comes on the heels of the World Bank’s observation in June 2023 that the Federal Government’s spending on personnel costs and debt servicing had already exceeded total revenues in 2022.
According to the World Bank, this marked the first instance where these expenses outpaced government revenue, resulting in weakened spending on capital expenditures. In 2022, personnel costs and interest payments on loans constituted 59% of the government’s total expenditures, with personnel costs and interest payments consuming 102% of the government’s revenues during that period.
Furthermore, the Federal Government has announced a 19.15% increase in budget spending for 2024 compared to the previous year. The budget is projected to be N26.01tn, up from N21.83tn in 2023. The government has affirmed its commitment to maintaining the January-December budget implementation cycle, with President Bola Tinubu expected to present the 2024 appropriation bill to the National Assembly for ratification before December 31, 2023.
Minister of Budget and National Planning, Abubakar Bagudu, clarified that the increased debt service costs were due to the securitization of N22.7tn in Ways and Means, effectively making it a Federal Government debt at a 9% interest rate. Personnel costs also saw a significant increase due to transfers arising from an agreement between the Federal Government and Organized Labour.
In response to the budget proposal, economists have expressed concerns about the country’s increasing debt. They call for a closer examination of the government’s ability to manage such extensive expenditure, particularly in light of ongoing efforts to secure loans for various projects.
Despite the budget’s ambitious goals, some experts believe that the government should focus on reducing expenditure and the cost of governance to address revenue challenges. The budget’s reliance on loans has raised concerns about its sustainability and impact on the economy.
The Federal Government is also preparing to present a supplementary budget in response to growing obligations following the removal of the petroleum subsidy. This budget, coupled with the main 2024 budget, reflects the government’s commitment to addressing the nation’s economic challenges and promoting growth.
Moreover, the Federal Executive Council (FEC) has decided to hold its meetings on Mondays, deviating from its previous Wednesday schedule. The meetings will be convened when necessary, rather than on a weekly basis, according to the Minister of Information, Mohammed Idris. This change in meeting frequency aims to streamline government operations and improve efficiency.
Economists and experts remain watchful of the budget’s impact on Nigeria’s fiscal health and its potential to spur economic growth and development.