Federal allocation to states and local government areas may increase by 109.74 per cent to N14.04tn in 2024.
This is according to the Federal Government’s revenue projections in its Revised 2024 – 2026 Medium-Term Fiscal Framework.
Based on these projections, disbursement to states and local governments has been predicted to increase from the N6.69tn projected in 2023 to N14.04tn in 2024.
Revenue available in the Federation Account is expected to increase by 124.43 per cent to N26.61tn in 2024 from N11.86tn in 2023. This projected rise in revenue is supposed to happen because of exchange rate effects, higher oil production projection, and the removal of subsidy.
So far in 2023 (January to September), revenue available in the federation account was N7.48tn. Of this, states and local governments have received N2.00tn and N1.54tn, respectively.
While presenting the 2024 budget to a joint session of the National Assembly, President Bola Tinubu noted while speaking about revenue, “We are currently reviewing our tax and fiscal policies. Our target is to increase the ratio of revenue to GDP from less than 10 per cent currently to 18 per cent within the term of this Administration. Government will make efforts to further contain financial leakages through effective implementation of key public financial management reforms.”
Meanwhile, while presenting the breakdown of the 2024 budget, the Minister of Finance and Budget Planning, Abubakar Bagudu, highlighted that revenue generation remained the major fiscal constraint to the country’s fiscal viability.
He also stated that the government was reviewing the current tax and fiscal policies, with the intention of improving revenue generation.
Recently, the Minister of Finance, Mr Wale Edun, who was represented by the ministry’s Permanent Secretary, Mr Okokon Udo, at a Federal Account Allocation Committee meeting in Delta, noted that allocation to states has improved from an average of N650bn monthly before subsidy to over N1tn monthly post subsidy.
He said, “The economic reforms which this administration has undertaken since its inception in May 2023 clearly outlined the right steps to transformation of the country’s economy.
“In less than six months of the administration, we have witnessed the introduction of important reforms, such as petroleum subsidy removal, fiscal and monetary policies reforms aimed at removing multiple taxation among others. The Federation Account in particular is witnessing improved revenue inflow since the removal of subsidy from an average of N650bn monthly to over N1tn in the last four months.”
He noted that the Federal Government was ready to restore government revenue, promote fiscal balance and prudent management of government expenditure.
The projected boost in federal allocation to stated and local governments is expected to improve the pace of development in the subnational who are largely dependent on these funds.