The Federal Government plans to spend 61.63 per cent of its planned 2024 on personnel and debt service costs.
The personnel and pension costs of N7.78tn and the debt service cost of N8.25tn make up N16.03tn out of the N26.01tn 2024 budget.
The government would spend more on debt servicing than it would spend on paying the salaries and pensions of its workers.
Also, the amount budgeted for personnel and pension costs is expected to increase from N5.87tn in 2023 to N7.78tn in the 2024 budget.
This showed an increase of N1.91tn or 32.54 per cent amid concerns for a reduction in the cost of governance.
A 30.74 per cent increase in debt service cost from N6.31tn in 2023 to N8.25tn by 2023.
The World Bank in June 2023 stated that the Federal Government’s spending on personnel costs and debt servicing exceeded total revenues in 2022.
According to the Washington-based bank, this was the first time the Federal Government’s personnel costs and debt servicing surpassed its total revenue.
The bank added that due to this, spending on capital expenditures weakened.
According to the bank, personnel costs and interest payments on loans comprised 59 per cent of the government’s 2022 total expenditures.
The Federal Government also spent 102 per cent of its revenues on personnel costs and interest payments during the period under review.
Also, the Federal Government on Monday said it was projecting N26.01tn as expenses for the 2024 fiscal year.
This was an increase of 19.15 per cent from the N21.83tn approved in 2023.
This is as it approved the Medium-Term Expenditure Framework for 2024 – 2026.
The FG affirmed that the administration would maintain the January – December budget implementation cycle as President Bola Tinubu would soon present the 2024 appropriation bill to the National Assembly to ensure its ratification before December 31, 2023.
“The aggregate expenditure is estimated at N26.01tn for the 2024 budget, which includes statutory transfers of N1.3tn non-debt recurrent expenditure of N10.26tn. Debt service estimated at N8.25tn as well as N7.78tn being provided for personnel pension cost,” the Minister of Budget and National Planning, Abubakar Bagudu, told State House Correspondents after the Federal Executive Council meeting at the Presidential Villa, Abuja.
Bagudu clarified the increased debt service, saying it was “because N22.7tn Ways and Means was securitised, meaning it became a Federal Government debt at nine per cent.”
Equally, personnel costs rose significantly due to transfers from the agreement between the Federal Government and the Organised Labour.
Order CBN to honour Letters of Credit– SINET to Tinubu, NASS
Amidst several hardships facing the Nigerian populace, the Social Integrity Network, (SINET) has urged President Ahmed Bola Tinubu and the leadership of national assembly to compel the Governor of Central Bank of Nigeria (CBN) Mr. Olayemi Cardoso, to order and reconsider honouring the forward contracts that are genuinely backed up with proper compliant documents for utilisation against each Letters of Credit (LCs) opened by the commercial banks using the forwards as a hedge.
The group also urged the Federal Government to make further clarification concerning a statement credited to the CBN Governor on issues regarding the alleged and well-publicized revelations of a $2.4 billion forex trading fraud.
SINET recalled that “On February 5, 2024, the governor of CBN made this declaration in both his interactions with Senate committees and his interview on a national television, following the engagement of Deloitte Management Consultant to conduct a forensic investigation where he claimed that the said amount was uncovered.
A statement issued on Monday by SINET national coordinator, Ibrahim Issah, disclosed that “On the contrary, we wish to unequivocally state that these claims lack merit and do not take into account the consequences they will have on businesses, public perception, or the economy of our cherished nation and its implication on forex both at home and abroad.”
According to him, “Without sentiment, the claim is completely falsehood and unacceptable as he, the CBN governor, failed to consider its economic implications. It is pertinent to state that genuine businessmen and women across the country, borrowed Funds from commercial banks, some with interest rates as high as 30% to secure forex from the CBN through their respective commercial banks since CBN does not sell the dollars to individuals directly.
“The same funds have been deposited with CBN for the past one and half years for forwards allocated for which the Apex Bank is now claiming were fraudulent transactions. May we remind Mr. Governor that while the CBN allocated the forwards after collecting the naira for each forward allocated, the commercial banks used these same forward contracts as a hedge and issued Letters of Credit (LCs) to their various customers against their offshore credit lines and also as a sovereign guarantee to their offshore banks which stand unpaid till today as a result of the failure of CBN to honour the various forward contracts.
“May we also remind our CBN Governor that as a result of their failure to honour these contracts, the outstanding foreign loans continue to accrue interest (post-negotiation charges), which the commercial Banks are passing to their customers: the same customers you say do not have a genuine claim.”
The statement further stressed that, “The public would like to ask Mr. Governor the following questions: What will happen to the foreign bank that is expecting their payment to be paid back? What will happen to the businessmen and women who had borrowed Naira from commercial Banks and paid the same into the CBN account for the purchase of forex for over eighteen months? Who will bear the interest charged on borrowed funds locally? Who will bear the charges running against the offshore lines used in establishing Letters of Credit? What will happen to the businesses? What will happen to the employees that are dependent on the survival of the businesses that CBN is trying to kill?
“We call upon the senate president and, in fact, the president and Commander In-Chief of the Federal Republic of Nigeria to call the CBN governor to order and reconsider honouring the forward contracts that are genuinely backed up with proper compliant documents for utilisation against each Letters of Credit (LCs) opened by the commercial banks using the forwards as a hedge.
“Let us state categorically that the CBN is killing businesses by cancelling the forward contracts that were sold to them about 18 months ago at the rate of N450/dollar and now selling the same funds to the commercial banks and directing the bank to sell the money at the rate of 1,500/dollar to the same businesses who initially had a forward contract at the rate of N450/dollar.
“May we also remind Mr. Governor, that failure to honour these forward contracts is taking commercial banks longer time to clean the offshore lines already used for establishing Letters of Credit against which shipments have been done and payment made to LC beneficiaries by the offshore banks. The delays of the commercial banks to settle their Forex obligations to their offshore banks is making our country risk to be very high.
“Lastly, the public will like to call on the coordinating minister for the economy, Mr. Wale Edun to engage the CBN regarding this issue of undelivered forward contracts because at present in Nigeria, almost 60% of companies in the manufacturing sector have been closed due to the volatility of Forex in Nigeria in order to avoid the other 40% from also closing down.
“This will go a long way to help the few remaining manufacturing companies still in operation in Nigeria and also encourage the new investors that the president and commander in-chief of the federal republic is trying woo to bring their investments to Nigeria.”
APC To Yahaya Bello: Stop Confusing The Party, No Vacancy For National Chairman
The leadership of the ruling All Progressives Congress (APC) has told the immediate-past governor of Kogi state, Yahaya Bello that there is no vacancy in the office of the national chairman of the party.
The national publicity secretary of the party, Felix Morka warned the former Kogi governor to stop confusing the party, saying the position of the national chairman is currently occupied.
Morka handed down the warning while addressing newsmen at the national secretariat of the party.
The posters of the former governor were seen on major streets in the Federal Capital Territory (FCT), especially around the federal secretariat and on walls and fences of structures around the APC national secretariat along Blantyre Street, Wuse 2, Abuja.
The bold picture of the former Kogi state governor is adorned with the inscription, “APC Next Level. Alhaji Yahaya Bello as APC National Chairman. Leading the Change, Building a Stronger APC.”