Budget implementation: What’s driving Nigeria's low performance?

Nigeria's Senate recently criticized the executive branch for the low performance in implementing the capital component of the 2024 budget. The key issue highlighted was the significant shortfall in projected revenue, creating difficulties in funding the budget. Debt service has become a major allocation, with an amount eight times higher than education and defense combined, highlighting the budgetary constraints faced by the government. The revenue shortfall of four trillion Naira further compounds the funding challenges for the 2024 budget. The extension of the 2023 budget and the plan for a supplementary budget of 6.6 trillion Naira for 2024 have raised concerns about the sustainability of running three budgets concurrently. Tilewa Adebajo, CEO of CFG Advisory, expressed the need to consolidate budgets into one to prioritize essential projects and manage the limited available funds effectively. Despite the unprecedented nature of these budgetary maneuvers, Adebajo emphasized the importance of optimizing resources and aligning expenditures with revenue projections. The escalating public debt in Nigeria, amounting to 121.6 trillion Naira as of the first quarter of 2024, has raised alarms about the country's fiscal health. Adebajo highlighted the need for remedial legislation to address the growing debt levels and ensure fiscal responsibility. With a significant portion of revenues allocated to debt servicing, the sustainability of current debt levels is questionable, necessitating strategic budget adjustments and long-term planning to stabilize the economic outlook. As inflation continues to challenge Nigeria's economic stability, Adebajo predicted another rate hike by the Monetary Policy Committee (MPC) to curb rising inflation driven by fuel and food prices. With core inflation persisting and the money supply nearing record highs, Adebajo recommended a proactive approach to monetary policy to maintain price stability and address inflationary pressures effectively. The outlook for Nigeria's economy hinges on strategic fiscal management and prudent financial decision-making to navigate the mounting challenges and achieve sustainable growth. In conclusion, Nigeria faces a complex landscape of budgetary pressures, mounting debt levels, and inflationary challenges. The need for fiscal discipline, strategic budget consolidation, and proactive monetary policy interventions are crucial to safeguarding the country's economic stability and fostering sustainable development. Stakeholders must collaborate to address the structural deficiencies in budget implementation, revenue generation, and debt management to steer Nigeria towards a path of fiscal resilience and long-term prosperity.