The administration of President Bola Tinubu may be finalising a strategy to shift the government away from a culture of excessive fiscal deficit and toward fiscal consolidation as a required measure for tackling long-standing macroeconomic difficulties ahead of the 2024 budget presentation.
According to reports, the Ministry of Finance and the Budget Office, a department within the ministry, have begun developing new austerity measures as part of the overall strategy. These measures would significantly reduce ongoing expenses and control official waste in the work of ministries, departments, and agencies (MDAs).
The Federal Government finally agreed to offer all categories of civil servants a pay increase of N35,000 per month on Sunday after considerable back-and-forth. The provisional wage rise will at least be applied to all federal government officials covered by the Consolidated Public Service Wage Structure, estimated at 144,766 as of April.
The add-on will cost Tinubu’s administration at least N5.07 billion every month to pay for, according to some experts. This would raise the current administration’s financial burden associated with salary payments.
Different ministries are said to have been informed, in clear terms, to streamline their operations and stop picking bills that would not add value to governance going forward.
Some MDAs, which are hitherto considered cost centres, are said to have also been handed the mandate of retooling their operations to be commercially relevant.
The radical departure being contemplated, The Guardian learned at the weekend, is imposed by what sources described as a harsh reality that is shaped by slow revenue growth, huge public debt liabilities, and expanded personnel costs.
According to reports, the Federal Government has tasked Wale Edun, Minister of Finance and Coordinating Minister of the Economy, with developing a workable plan to close the enormous gap between revenue and expenditure as it begins the difficult task of ending years of significant fiscal deficits.
The fiscal deficit increased dramatically under former President Muhammadu Buhari, rising from N880 billion in 2015 to N9.3 trillion last year, or almost N2 trillion more than anticipated.
Each year, the actual deficit exceeds the projected sum; in some years, it exceeds 50 percent. In the running budget, the fiscal deficit was about 50 percent of the expenditure outlay—N21.83 trillion.
Some economists had dismissed the appropriation as spurious and unimplementable. Shortly before the current administration assumed office, Ike Chioke of Afrinvest Group told The Guardian that the Tinubu administration would also assume there was no budget for the assumption of office.
There is no official communication on the performance of the budget yet. But sources with knowledge of the implementation told The Guardian that the appropriation is threatened by unfunded fiscal deficits.
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