Financial analysts at FSL Securities Limited have said that with the current naira devaluation, the 2024 budget size is insignificant to drive the economy.
Mr. Victor Chiazor stated this in his economic review and outlook for the 2024 presentation tagged ‘Navigating the Tides’.
The two chambers of Nigeria’s National Assembly had in December passed the 2024 Appropriation Bill of N28.7 trillion, increasing it by approximately N1.2 trillion from the initial N27.5 trillion proposed by President Bola Tinubu.
Chiazor noted that with the free fall of the naira, the value of the 2024 budget size was below $30 billion which was against the value in 2022 and 2023.
Chiazor said that the economic activities in the new financial year are expected to pick up from the first quarter of 2024 as ministers and major government appointments have been made.
He added that the year 2024 will see the federal government struggle with the current elevated debt levels as its current debt-to-service ratio remains significantly high.
On the equity side, he said the equities market will likely struggle to achieve the performance reported in 2023 but will be dominated by domestic players as the market expects foreign investors’ interest in the market to be low.
Chiazor said the high-interest rate environment is expected to reduce the level of capital raising exercise by the private sector and may slow private sector activities.
Chiazor said that government borrowing is expected to continue, and at a higher interest rate as it continues to raise capital to fund its budget deficit.
He added that more transparency is needed around the issue of fuel subsidy and this needs to be immediately managed by the new government, to avoid a total collapse of the country’s fiscal space.