In a significant fiscal move, President Bola Tinubu has formally requested the Senate to approve an increase of N6.2 trillion in the 2024 budget, raising it from N28.7 trillion to N34.9 trillion. This request was made official through a letter read by Senate President Godswill Akpabio during a session of the upper legislative chamber on Wednesday.
The proposed budget increment is intended to address both infrastructure needs and recurrent expenditures. Specifically, Tinubu’s letter outlines an allocation of N3.2 trillion for infrastructure projects and N3 trillion for recurrent expenses. This ambitious funding plan aims to bolster the nation’s development agenda and ensure smooth government operations.
In his letter, Tinubu emphasized the necessity of these funds, stating, “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 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 proper operation of the federal government.”
Amendment to Finance Act
In addition to the budget increase, President Tinubu has urged the National Assembly to amend the Finance Act of 2023. This amendment specifically targets windfalls generated by banks from foreign exchange gains, proposing a one-time tax on these profits. The rationale behind this move is to ensure a fair taxation policy and to fund key public sectors such as capital infrastructure development, education, healthcare, and welfare initiatives.
“Furthermore, the proposed amendments to the Finance Acts 2023 are required to impose 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 of which are components of the Renewed Hope Agenda,” Tinubu stated.
Financial Gains from Forex Revaluation
Data from Nairalytics reveals that top Nigerian banks reported significant profits, totaling N3.3 trillion in 2023, largely due to forex revaluation gains. The top seven local banks alone generated N2.48 trillion in 2023, with an additional N882.9 billion recorded in the first quarter of 2024. This windfall has prompted the proposed tax, aimed at redistributing these unexpected profits towards essential national projects.
Context and Previous Budget Adjustments
The National Assembly had initially passed the 2024 appropriation bill in January, increasing the budget size from President Tinubu’s proposed N27.5 trillion to N28.7 trillion. This N1.2 trillion hike included allocations of N1.74 trillion for statutory transfers, N8.27 trillion for debt servicing, N8.76 trillion for recurrent expenditure, and N9.99 trillion for capital expenditure. The Senate Committee on Appropriation made several adjustments to accommodate additional funding requests, including foreign exchange differentials and revenue increases from Government-Owned Enterprises (GOEs).
President Tinubu’s latest proposal underscores the administration’s commitment to addressing Nigeria’s infrastructure and economic needs while seeking innovative solutions to fund these initiatives through strategic fiscal policies.
