In January 2024, the National Assembly passed the 2024 appropriation bill, raising its size from President Bola Tinubu’s proposed N27.5 trillion to N28.7 trillion. The budget is to be financed with N19.6 trillion revenue, with a deficit of N9.18 trillion.
The budget also has a debt service component of N8.2 trillion which is to be funded through borrowing.
President Bola Tinubu in a letter to the Senate requesting an increase in the 2024 appropriation act by N6.2 trillion, from N28.7 trillion to N34.9 trillion, sought an amendment to the Finance Acts 2023 to enable the government charge 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.
In the letter, Tinubu proposes allocating N3.2 trillion for infrastructure projects and N3 trillion for recurrent expenditure.
According to the letter, “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 prosper operation of the federal government.
“They shall be funded by revenue accruing to the federal government of Nigeria.”
In addition, Tinubu urged the National Assembly to amend the Finance Act of 2023, specifically targeting windfalls generated by banks from “foreign exchange gains.”
Top Nigerian Banks raked in a profit of N3.3 trillion in 2023 mostly arising from forex revaluation gains. This is according to data from Nairalytics. In 2023, the top seven local banks raked in N2.48 trillion while in 2024 first quarter they raked in a whopping N882.9 billion.
However, reacting to the proposal by the, Barrister Eze Onyekpere, a fiscal governance expert, said there is no evidence of the proper implementation of the capital component of the 2024 Appropriation Act due to lack of funds.
“I understand the 2023 Appropriation Act and the Supplementary Budget have not been fully implemented due to paucity of funds,” Onyekpere said, and asked “From which source would the government raise N6.2 trillion to fund this supplement?
“Amending the Finance Act to tax foreign exchange gain windfalls will only apply to the future and it cannot be retroactive. It cannot be used to get revenue from already accrued gains.
“However, it is not desirable and it is improper to extend taxation to an exchange rate gain when FGN will not lift a finger to compensate companies for exchange rate losses.”