Nigeria is facing one of its highest budget deficits on record even after the removal of fuel subsidies that were once a major drain on the country’s finances.
The drain of the petrol subsidy on the cash-strapped government’s earnings made a compelling case for its removal on President Bola Tinubu’s first day in charge, yet despite its removal, the federal government is now projecting to spend N9.18 trillion more than it will earn next year.
Analysts say the high cost of governance and pockets of inefficient spending within government continue to widen the budget deficit, wiping some of the gains of the wasteful subsidy removal.
The implication of the increased budget deficit in 2024 is that the government may end up spending less on capital projects and human capital which are critical in spurring economic growth and delivering jobs.
The 2024 budget proposed an aggregate expenditure of N27.5 trillion for the Federal Government in 2024, of which the non-debt recurrent expenditure is N9.92 trillion naira, while debt service is projected to be N8.25 trillion naira and capital expenditure is N8.7 trillion.
In his first budget speech to lawmakers on Wednesday, President Bola Tinubu, at the budget presentation on Wednesday, November 29, said the Federal Government would work towards reducing the rising debt.
Nigeria’s total debts now stand at N87.7 trillion, according to data from the Debt Management Office (DMO), which puts pressure on inflation and worsens Nigeria’s currency problems.