The Federal Government has devised a multifaceted approach to reduce the budget deficit by almost half, implementing a combination of fiscal, economic, and accounting strategies.
These measures aim to plug financial leaks and redirect funds toward long-term economic growth.
Currently standing at 6.11% of the Gross Domestic Product (GDP), Nigeria’s budget deficit is slated to be reduced to 3.88% through a new comprehensive revenue generation and management strategy.
This strategy is a central pillar of the N27.5 trillion budget proposal recently presented by President Bola Tinubu, marking the first full budget of his administration.
The target is to bring the deficit within the three percent threshold set by the Fiscal Responsibility Act 2007.
With Nigeria facing declining revenues and persistent high expenditures, particularly in recurrent spending, the budget deficit has consistently exceeded legal guidelines.
Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, outlined the comprehensive strategy designed to underpin the implementation of the 2024 budget.
The primary objectives include deficit reduction, revenue enhancement, and embedding significant value in expenditures.
To achieve these goals, the government will scrutinize recurrent expenditure, prioritizing essential spending while eliminating wasteful or unproductive costs.
This may involve streamlining administrative processes, reducing travel expenses, and consolidating certain functions.
Additionally, the government will efficiently allocate capital expenditure, focusing on projects with a high impact on productivity, job creation, and infrastructure development, such as energy and transportation.
On the revenue front, the government plans to expand the tax base by identifying new sources of revenue, including the informal sector and digital transactions.
This entails simplifying tax laws, improving tax administration, and implementing targeted compliance measures.
The government will also enhance tax collection efficiency by investing in technology, strengthening tax administration systems, and promoting taxpayer education to improve compliance and reduce tax evasion.
Furthermore, the government will explore alternative revenue sources beyond traditional taxation, such as asset monetization, privatization, public-private partnerships, and targeted fees for specific services. The implementation of tax breaks and incentives for priority sectors is anticipated to attract domestic and foreign investments, fostering job creation and economic expansion.
Collaboration with state and local governments is also on the agenda to enhance tax administration coordination, reduce leakages, and eliminate multiple taxation. This collaborative effort aims to streamline tax collection, improve compliance, and optimize revenue generation.
Edun emphasized that the 2024 budget represents a shift from excessive borrowing to prudent financial management.
The government’s commitment to fiscal prudence is underlined by the ambitious plan focused on balancing the economy and ensuring a robust economic future.
The new budget philosophy is expected to attract foreign investors through private partnerships, fostering a stable macroeconomic environment.
As the National Assembly begins debates on the 2024 Appropriations Bill, the government’s budget proposal reflects careful consideration, with an emphasis on capital expenditure, revenue diversification, and fiscal responsibility.
Senators, while scrutinizing the budget, acknowledged its brilliance and urged full implementation to achieve renewed hope and economic development.
