By Sogeyinbo Abdulrahmon Olabanji (SIWES student, Gate Way Polytechnic Saapade)
Amidst pressure from organized labor, the Federal Government is considering resorting to borrowing to fund the proposed 2024 salary increase for federal workers, breaching the Fiscal Responsibility Act (FRA) threshold.
The Budget Office of the Federation attributes the projected N9.3 trillion deficit to salary review, increased pension obligations, and higher debt service costs.
Despite representing 50% of total revenues, analysts foresee a potential higher proportion due to revenue constraints and 2023 performance.
The FG justifies exceeding the 3.0% GDP threshold by citing threats to national security. The medium-term plan reveals a rising deficit, increased borrowings, and escalating debt service expenditures, raising concerns about the fiscal alignment and a decline in capital expenditure, prompting analysts to call for a realignment favoring infrastructure development.
The Budget Office acknowledges fiscal constraints, emphasizing efforts to improve revenue generation, tax administration, and containment of financial leakages while aiming for an 18% revenue-to-GDP ratio.
The government underscores the importance of early budget passage for effective implementation of macro-fiscal and sectoral objectives.
