With less than 45 days to the end of the 2024 fiscal year, the Federal Government is preparing to borrow an additional $2.2 billion (N3.76 trillion) — comprising a $1.7 billion Eurobond and $500 million — to fill budgetary gaps.
Wale Edun, Nigeria’s Minister for Finance and Coordinating Minister of the Economy, disclosed this during a briefing after the Federal Executive Council (FEC) meeting on Thursday, as reported by Bloomberg.
“We just had the Federal Executive Council meeting, and I am privileged to present two memoranda to the Federal Executive Council. The first one was to complete the borrowing programme of the Federal Government in terms of external borrowing with the approval of a $2.2 billion financing programme,” Edun said.
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He described the borrowing plan as a sign of confidence in the country’s financial markets and macroeconomic policies.
“Earlier in the year, we had shown the resilience of the Nigerian financial markets, and the depth of their capacity, the increased complexity and sophistication by having a domestic issuance of dollar bonds, which attracted Nigerian investors from far and wide.
“Likewise, being able to access the international capital market is also a sign of the acceptance and the support for the macroeconomic programmes of the President Bola Tinubu-led administration,” he added.
This announcement comes at a time when the 2024 budget shows a significant underperformance. As of September, the third quarter of the fiscal year, Nigeria had only fulfilled 38% of its budgetary commitments to Ministries, Departments, and Agencies (MDAs), according to official reports on the Open Treasury Portal.
This poor budget performance can be tied to the unrealistic assumptions made in Nigeria’s 2024 fiscal framework.
2024 Budget Framework
Targets vs Reality
Nigeria has performed way off the mark for some of the parameters in the 2024 fiscal framework. For starters, the government banked on producing 1.78 million barrels of oil per day (mbpd), but reality has been less generous. The highest monthly average in 2024 hovered around 1.64 mbpd with condensates and 1.426 mbpd without, according to the NUPRC.
Then there is the naira. The budget assumed an exchange rate of N800-to-$1, but the Central Bank of Nigeria (CBN) now pegs it at a N1,657-to-$1 at press time.
The average inflation rate, expected to stay at 21.4%, decided to take a hike, hitting 33.88% in October, based on the Consumer Price Index (CPI) from the National Bureau of Statistics (NBS).
Even oil prices couldn’t hold steady. While the budget set a benchmark of $77.96 per barrel, the actual price has slipped to around $74.83, according to global insight platform CEIC data.
Most importantly, the plan was to keep the budget deficit at about N9.18 trillion, but by the second quarter, it had already reached N4.5 trillion.
Parameter2024 TargetRealityOil production1.78 million barrels per day (mbpd)1.64 mbpd (with condensates); 1.426 mbpd (without condensates)Exchange rateN800 to $1N1,657 to $1 (CBN rate)Inflation rate21.4%33.88% (October CPI)Oil price benchmark$77.96 per barrel$73.17 per barrel (CEIC)Deficit targetN9.18 trillionN4.5 trillion (as of Q2)
Despite the weak 2024 performance, the Federal Government has unveiled an ambitious fiscal framework for 2025.
The proposed budget size is projected to increase from N27.5 trillion to N47.8 trillion. Oil production is estimated at 2.06 million barrels per day, while the oil price benchmark has been reduced to $75 per barrel. The exchange rate is conservatively set at N1,400 to $1.
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2024 Proposed Budget Benchmark. Source: 2025-2027 Fiscal Framework. Budget Office
While these targets appear more grounded than the 2024 assumptions, whether they can deliver better outcomes remains to be seen. Nigerians, however, may be growing weary of a cycle of ambitious projections but underwhelming results.
The post 45 Days to Year End, FG Plans N3.7trn Borrowing to Fund Budget as It Misses Targets appeared first on Foundation For Investigative Journalism.