Notes on FG’s 2024 Budget Performance

Postscript by Waziri Adio

Midweek, the Budget Office of the Federation published Federal Government’s Budget Implementation Report (BIR) for the fourth quarter of 2024. The report is several months behind schedule. According to Section 50 of the Fiscal Responsibility Act (2007), budget execution reports should be submitted to the National Assembly and made public not later than 30 days after the end of each quarter. In fidelity to the law, most states of the Federation have already released their detailed budget performance reports for the second quarter of 2025. The Federal Government, which made the law, should not be the straggler, and needs to quickly correct the noticeable decline in the promptness and the frequency of its financial disclosures. There is no justifiable excuse for publishing a mandated report about nine months after the due date, especially if it would still be tagged as provisional.

But better late than never. The long-awaited report has provided a good view of Federal Government’s finances in 2024, even when the capital budget for the year, as approved by the legislators, will be running, ungainly, till the end of 2025. On the positive side, the 58-page report has more granular data than previous reports, especially in the breakdown of the releases and utilisations of funds for personnel, overhead, and capital by the Ministries, Departments and Agencies (MDAs). There are other positives from this report. But it has also thrown up or reinforced many reasons for concern. In this note, I will present a summary of FG’s 2024 budget performance, weave in my observations and close with some comments.

Courtesy of the report by the budget office, we now know that Federal Government’s aggregate revenue in 2024 was N20.98 trillion. This is 68% higher than its 2023 aggregate revenue of N12.48 trillion, which is a good thing though it is difficult to know if this issued largely from improved revenue collection or from the significant depreciation of the Naira in 2024. It is important to note that the realised revenue in 2024 was 19% lower than the N25.88 trillion projected as revenue in the budget for the year. The breakdown shows that FG received 23.5% less than projected for oil revenue (N6.26 trillion actual oil revenue against N8.18 trillion budgeted); 62% less than it budgeted as retained revenue of GOEs (actual of N1.1 trillion against N2.86 trillion budgeted); and not a kobo of the N357.93 billion projected as its share of NLNG dividends. Remarkably, too, FG did not receive anything from the N6.28 trillion it was expecting from additional revenues (mostly from windfall tax on banks and exchange gains).

But these shortfalls were mostly compensated for by increases in the following areas: FG’s share of non-oil revenue rose by 40% (actual of N5.01 trillion against N3.57 trillion budgeted); its independent revenues increased by 37% (actual of N3.68 trillion versus N2.69 trillion budgeted); its drawdown on special levies’ accounts surged by 292% (actual of N1.18 trillion against budgeted N300 billion); TETFUND’s revenue increased by 134% (N1.64 trillion against N700 billon projected); domestic recoveries brought in N519.16 billion though no amount was projected for such; and grants and donor funding increased by 76% (N1.21 trillion against budgeted N686 billion). Without these increases that are probably mostly linked to major depreciation of the national currency in 2024, the revenue shortfall would have been much bigger.

From this report, it is also now public knowledge that the FG spent N34.49 trillion in 2024, which was just 1.6% lower than the N35.05 trillion appropriated as expenditure for the year. That was about 50% higher than the 23.04 trillion expended in 2023. By broad categories, the 2024 expenditure was as follows: N12.63 trillion on debt service; N11.59 trillion on capital; N8.53 trillion on non-debt recurrent; and N1.74 trillion on statutory transfers. This is where it starts getting interesting. The first point that jumps out here is that debt service was the highest expenditure line in 2024, accounting for 37% or more than a third of the total expenditure for the year. Also, debt service was the only expenditure that exceeded the projected amount. While N8.27 trillion was budgeted for debt service in 2024, the sum of N12.63 trillion was expended, an increase of 53%.

It is befuddling that we spent more than we had planned on debt service. But a probable explanation would be that the massive depreciation of the Naira in the first half of 2024 affected the dollar component of the debt service, which cuts both ways since the depreciation also boosted the Naira value of dollar-denominated revenues. Irrespective of the cause, the fact that we committed more than a third of the actual expenditure to debt service alone should focus our minds on the reality that something is fundamentally broken here and needs to be fixed. It is not very useful getting fixated on debt as a portion of GDP or even the ratio of debt service to revenue (which, thankfully, reduced to 60% in 2024 from a depressing high of 97% in 2022).

A second and related issue is that 2024 budget deficit landed at N13.51 trillion. The projected deficit was N9.18 trillion. FG had planned to generate N25.88 trillion and spend N35.05 trillion. It ended up raising only N20.98 trillion but went ahead to spend N34.49 trillion or almost all it had initially budgeted to spend. Most of us will not run our personal budgets or private businesses this way. When they experience a revenue shortfall, most people trim their expenses. But that was not the path the FG took. It spent as if it had no money problem. The 2024 actual deficit was 47% higher than was projected. The eventual deficit and the variance would have been even much higher if not for N3.19 trillion secured as budget support in 2024.

You can do your math about what, without the budget support, the actual deficit would have been as a portion of projected deficit or as a percentage of the actual expenditure. From the sound of it, this budget support probably came from some multilateral institutions. But, as the report confirms, it was not part of the approved borrowing plan in the 2024 appropriation. There is something unseemly there. The larger concern here is not just that 2024 actual deficit came to 3.6% of GDP, which is above the 3% threshold set in the law on fiscal responsibility. It is about how even after we found ourselves in a deep hole we have not stopped digging and about how we are locking ourselves into the vicious cycle of high deficit, more borrowings, and increasingly sizeable expenditure on debt service (which crowds out spending on critical areas that matter to the people). One should not be tired of saying this: we cannot borrow our way out of this crisis, and the earlier we prioritise fiscal consolidation, the better for us.

The third issue is the futility of voodoo forecast and budgeting. Our projections on oil production and revenue, unsurprisingly, continue to fall short. But instead of taking the necessary learning and changing course, we go higher the next time. We failed to meet the oil production target of 1.78m barrels per day in 2024 but thought it wise to raise the benchmark to 2.06m barrels per day in 2025. FG could raise only N20.98 trillion out of the projected revenue of N25.88 trillion in 2024, but felt it was not a big deal to increase projected revenue to about N42 trillion in 2025. This is a cultivated game of self-deceit.

There is no place this self-delusion is more apparent than in how we treat capital expenditure.

Page 33 of the BIR has this remarkable line: “Greater amount of government’s financial resources continued to be directed to structural reform of the economy and the provision of critical infrastructure in the roads, power, housing, rail and aviation sectors as well as the provision of physical and food security. In view of this, a total of ₦13.77 trillion was allocated to capital spending in the 2024 Budget.” The only problem is that this is a carefully packaged and repeated fiction.

True, N13.77 trillion was allocated to capital expenditure in the 2024 budget. But this was basically to make capital the highest expenditure line, supposedly gulping 39.3% of the budget, a nice line for spin. But it is a mere sleight of hand designed to mask the prominence of debt service, which was bumped to third place at N8.27 trillion or 23.6% of the appropriation, but which in reality emerged the highest line of expenditure. This self-delusion is the same reason why we stretch the projected revenue unreasonably so as to obscure the widening deficit. Some analysts with organisations like the IMF think we don’t know what we are doing and categorise such as forecast errors. But we very much know what we are doing. It is a form of optical illusion. It eventually comes at a cost.

The BIR indicates that N11.59 trillion was expended on capital expenditure in 2024, which is just 16% less than the N13.77 trillion allocated, and can be deemed not too bad in the grand scheme of things. But it gets confusing from here on. In one part, the report states that N6.17 trillion was expended on capital in the 2024 fiscal year. In another part, it says that as at June 2025 only N3.27 trillion of the amount released and cash-backed had been utilised. I am confused about whether the two amounts should be added or if the lower figure is a component of the higher one.  

Much later, on pages 35, 39 and 40, the report has disaggregated data on capital allocations to and utilisation by MDAs, including the presidency. The sum of it is that out of N8.49 trillion budgeted for capital for the MDAs, only N3.99 trillion was released and cash-backed, out which only N3.27 trillion had been spent as at 30^th June 2025. If we stick to this snapshot, the amount released for capital was the second lowest (only above the N1.74 trillion for statutory transfers, which expectedly was released 100%). This shows that only 33% of the N8.49 trillion appropriated for capital expenditure was utilised and that only N3.27 trillion or just 82% of the N3.99 trillion released was spent in the 18 months of the budget. You will get a depressing figure if you take the amount listed as utilised by the MDAs on capital as a percentage of the total expenditure for the year.

There is clearly a problem with our capital spending, and despite our sensible aspiration to spend significant sums on capital, it is, in reality, the least of our priorities. There are three key issues here: one, capital is now mostly funded from borrowings, is usually released late and is the portion of the budget that is deemed expendable (salaries and debt service are hard expenditures which swallow almost all available revenue); two, the absorptive capacity of our MDAs is low and this is not fully explained by the demands of the procurement law; and three, not all spendings classified as capital align with the needs and priorities of the people (as someone noted recently, bulletproof cars and renovation of official residences do little to advance citizens’ welfare or the productive capacities of the people and the economy).

We definitely need to spend more on capital, and prudently too. We need to address the challenges, instead of continuing in self-delusions or focusing exclusively on borrowing to fund capital. FG can raise additional revenues by checking the well-documented profligacy of its GOEs, blocking leakages, and re-assessing the fiscal relationship with the national oil company. Extending the lifespan of capital budgets is of limited use. Whatever is not implemented in one financial year should be rolled over into the next. In any case, most capital spendings straddle multiple years. If 2024 capital expenditure is still running and is troubled, it is conceivable that the 2025 capital has not even taken off, and we are just two months to the end of the fiscal year.

Running multiple budgets simultaneously is untidy and should be discontinued. We also need to return to the discipline and the predictability of the January-to-December budget cycle. The trick for getting the budget passed on time is to always start early. We are already at the end of October and there is no idea when the 2026 budget proposal will be presented by the president. The Medium Term Expenditure Framework (MTEF) has not even been tabled before the parliament. After two years in the saddle, it is past time for the administration to get a firm grip of the budgeting process.