Tinubu seeks N6.2trn budget boost, amendments to finance act in 2024

Business a.m.

President Bola Tinubu has officially communicated his request to the National Assembly for an upward adjustment of the 2024 appropriation act by N6.2 trillion.

The President’s request was revealed in a letter read by Senate President Godswill Akpabio during the upper legislative chamber’s plenary session on Wednesday.

 Tinubu’s recent request to increase the 2024 appropriation act by N6.2 trillion indicates a significant shift in the country’s spending plans for the fiscal year. If approved, the total budget for 2024 would surge from N28.7 trillion, as proposed by Tinubu and passed by the National Assembly in December, to N34.9 trillion,Business a.m. understands. 

The president’s proposed N6.2 trillion increase to the 2024 appropriation act aims to finance both capital and recurrent expenditures, as he seeks to allocate N3.2 trillion towards infrastructure projects. In addition, N3 trillion will be provided for recurrent expenditures,

“Pursuant to section 58 (2) of the constitution of the federal republic of Nigeria as amended, I forward herewith the above named bills for consideration and passage by the senate,”  the president stated. 

He added: “The appropriation act amendment bill seeks to amend the principal act to provide the sum of N3,200,000,000,000 for Renewed Hope Infrastructure Projects and other critical infrastructure projects to be undertaken across the country and the sum of N3,000,000,000,000 to meet further recurrent expenditure requirements necessary for the prosper operation of the federal government.

“They shall be funded by accruing to the federal government of Nigeria.”

Tinubu also made another important request to the National Assembly, this time seeking to amend the Finance Act of 2023. Specifically, the president has called for a tax on windfall profits realised by banks from foreign exchange gains.

“Furthermore, the proposed amendments to the Finance Acts 2023 are required to a one-time windfall tax on the foreign exchange gains realised by banks in their 2023 financial statements to fund capital infrastructure development, education, and healthcare as well as welfare initiatives all which are components of the Renewed Hope Agenda,” he said.

In an effort to prevent potential windfall gains by banks, the Central Bank of Nigeria (CBN) issued a directive on September 12, 2023, prohibiting banks from using profits generated by the revaluation of the naira to pay dividends or finance their operations.

The CBN, in its review of the effects of the foreign exchange (FX) regime change, identified the potential for significant gains to banks’ foreign currency (FCY) assets and liabilities. This, in turn, could lead to a situation where the banks receive windfall profits, which may not be in the overall interest of the economy.

In its efforts to reform the foreign exchange market, the CBN adopted a significant policy change in June 2023 by unifying the various FX windows into the Investors and Exporters (I&E) window. This move, while intended to simplify the FX regime and promote transparency, led to a depreciation of the naira against other currencies, creating volatility in the FX market.

This decision by the CBN, although well-intentioned, had unforeseen consequences for the local currency, highlighting the complex nature of monetary and financial policies.