FG OVERSHOOTS BORROWING TARGET BY N4.79TN AS NEW DEBT HITS N12.62TN
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By ; Sunmola Ganiyat
The Federal Government exceeded its 2024 borrowing target by N4.79tn after a wider-than-expected budget deficit forced it to raise significantly more funds than originally planned.
The latest Fourth Quarter and Consolidated Budget Implementation Report for 2024, released by the Budget Office of the Federation, showed that the government’s new borrowings rose to N12.62tn, exceeding the approved N7.83tn target by 61.2 per cent.
The increase in borrowing was largely driven by a significant revenue shortfall, which pushed the fiscal deficit to N13.51tn, compared with the approved deficit of N9.18tn.
According to the report, the Federal Government generated N20.98tn in revenue during the year, falling N4.90tn short of the N25.88tn budget estimate.
Total expenditure stood at N34.49tn, only N561.29bn below the approved N35.06tn. This indicated that the wider fiscal deficit was primarily caused by weaker-than-expected revenue rather than excessive spending.
The Budget Office stated that the N13.51tn deficit was N4.34tn, or 47.33 per cent, higher than the projected deficit for 2024. It was also above the N10.55tn deficit recorded in 2023.
An analysis of the government’s financing profile showed that domestic borrowing remained at the budgeted N6.06tn, while foreign borrowing increased from the projected N1.77tn to N3.37tn.
The government also received N3.19tn in budget support, despite making no provision for the financing source in the 2024 budget. The report did not disclose the source of the budget support, which was classified as new borrowing.
Combined, domestic borrowing, foreign borrowing and budget support brought total new borrowings to N12.62tn, representing a N4.79tn increase over the approved borrowing programme.
The report indicated that new borrowings financed approximately 36 per cent of the Federal Government’s 2024 budget, underscoring the country’s continued reliance on debt financing to fund public expenditure.
In addition, multilateral and bilateral project-tied loans amounted to N1.98tn, compared with the N1.05tn budget estimate, resulting in a positive variance of N929.45bn.
Expected privatisation proceeds of N298.49bn, however, were not realised during the fiscal year.
The Budget Office attributed the wider financing gap mainly to revenue underperformance.
Although total revenue increased by N8.50tn, or 68.11 per cent, from the N12.48tn recorded in 2023, it remained N4.89tn, or 18.92 per cent, below the 2024 budget target.
Oil revenue accounted for much of the shortfall, with gross oil revenue standing at N15.07tn, about N4.93tn below the N19.99tn budget estimate.
The report attributed the weaker oil revenue to lower crude oil prices and production. Average international crude oil prices stood at $74.65 per barrel in the fourth quarter, below the budget benchmark of $77.96 per barrel, while average daily crude production was 1.54 million barrels, compared with the projected 1.78 million barrels per day.
Non-oil revenue, however, performed above expectations. Gross non-oil revenue reached N16.09tn, exceeding the N10.81tn annual target by N5.29tn, or 48.91 per cent.
The stronger non-oil revenue performance was driven largely by increased collections from Company Income Tax, Value Added Tax, Electronic Money Transfer Levy and Customs revenue.
Despite the revenue shortfall, government spending remained broadly within the approved budget.
Total expenditure rose to N34.49tn, representing a 1.6 per cent shortfall from the N35.06tn budget estimate. Compared with 2023, however, expenditure increased by N11.45tn, or 49.7 per cent, from N23.04tn.
Non-debt recurrent expenditure stood at N8.53tn, below the budgeted N11.27tn, while debt-related spending rose significantly.
The report showed that total debt expenditure reached N12.36tn, exceeding the N8.27tn budget by N4.09tn, or 52.71 per cent.
Amid the growing fiscal pressure, capital expenditure also faced constraints, with the government releasing and cash-backing N5.81tn for capital projects during the 2024 fiscal year.
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