Unrealistic Projections Caused 2024, 2025 Budget Failures —NRS Chairman

…FG Now Releasing Funds For 2024 Capital Budget – Minister

The Federal Government’s 2024 and 2025 budgets failed because the projections were unrealistic, the Executive Chairman of the Nigeria Revenue Service (NRS), Zacch Adedeji., has said.

Adedeji spoke on Thursday at the National Assembly while appearing before the Senate Committee on Appropriations during a budget defence session.

The NRS chair was responding to multiple questions from members of the Senate Appropriations committee on the pervasive poor or zero capital release to Ministries Departments and Agencies (MDAs) in the two previous budgets.

“Budget funding must come from realistic projections. Efficiency is not about the size of the budget but about how much of it can actually be implemented.

“If you think you have ten units and spend accordingly, that is manageable. But if you assume you have one hundred and spend based on that assumption, you may run into serious problems if the funds do not materialise,” Adedeji said.

The NRS boss faulted the heavy reliance on revenue expectations from the Nigeria National Petroleum Company Limited (NNPCL) to fund budgets, pointing out that the company is now a private limited entity.

He said, “NNPCL is now a limited liability company. It is no longer a government corporation in the traditional sense. The connection between NNPCL and the Federation is through taxes and royalties.

“Whether they produce two million or three million barrels per day, what directly impacts Federation revenue are the taxes and royalties paid.

“Therefore, the focus must also be on cost of production. If oil sells at $64 and costs $55 to produce, the margin is limited.
When discussing centralised or decentralised payments, the issue is not the mode of payment.

“The gap between projected and realised oil revenue is wide. For example, how do we explain 18 percent performance in one year and projections of 36.5 percent the next year when actual performance is still below expectations?”

Harping on the need for realistic budgeting, Adedeji warned that budgets will continue to record poor implementation until the right balance is struck between projections and realisable revenue.

“If one naira is available and there is a twenty-naira liability, decentralisation will not solve the gap. Realistic budgeting is the starting point,” he added.

But the chairman of the Senate Appropriations committee, Senator Olamilekan Adeola, said whatever the President agreed to in implementing the budget, came with timelines.

“This document before us (budget) originated from the executive. The projections and challenges came from the executive arm, not the legislature.

“So the question is: Do we reduce the budget, or do we proceed and make adjustments?,” he asked.

The Senator Adeola also identified high debt financing as one of the drawbacks in budget implementation, urging drastic reduction in borrowing through assets disposal.

“If certain assets were disposed of and used to reduce debt, two things would happen: the overall debt stock would reduce, and future borrowing costs could also decline,” Adeola said.

Other members of the Appropriations committee threw a barrage of questions at the government’s economic management team, demanding explanations for the pervasive poor or zero capital release to the MDAs.

The Minister of Budget Planning, Atiku Bagudu and the Minister of State for Finance, Doris Uzoka-Anite also attended the session.

The lawmakers raised troubling questions regarding the workability of the N58.472tn 2026 budget amid poor implementation of the 2024/2025 budgets, especially their capital components.

Edun and Bagudu were somewhat taciturn during the season, as both ministers carefully chose their words in their responses.

Responding to one of the questions, Edun said the capital components of the 2024/2025 budgets were still being funded, but the senators found his response unsatisfactory.

It was Edun’s apparent unwillingness to divulge information that prompted the NRS chairman’s earlier intervention.

In her contribution, the Minister of State for Finance, Doris Uzoka-Anite, disclosed that the Federal Government had started releasing funds for capital components of the 2024 budget.

“Regarding the 2025 budget, funding processes are beginning. Payments for outstanding 2024 capital projects start today (Thursday)

“The financial management system is back online. For 2025, MDAs have been asked to upload their cash plans by Monday, after which payments will commence.

“We are ready to start, but the MDAs must complete their documentation requirements.
That is the position,” Uzoka-Anite said.

The Minister of State assured that full implementation of the 30 percent capital component of the 2024/2025 budgets would be completed before 31st March 2026, as projected by the government.

While the Appropriations committee was still grilling the government’s economic management team, the Minister of Culture, Tourism and Creative Economy, Hannatu Musawa, was also in another committee room answering questions on her ministry’s poor budget implementation.

Musawa disclosed to the Senate Committee on Culture and Tourism that of her ministry’s N13bn capital budget, only N28m was released.

Members of the committee, chaired by Senator Onawo Ogoshi, were dismayed by the minister’s revelation, wondering why such a critical sector could be starved of funds.

The various committees of the Senate have in the past few weeks, been inundated with complaints of zero release of the capital components of the budgets of almost all the MDAs.

Some of the affected MDAs include the Ministries of Health, Education, Power, Solid Minerals Development, Agriculture and other key ministries.

A few of the MDAs that received tiny fractions of their capital component of the 2024 budgets, had revealed that the fractions were released to them towards the end of 2025, making it impossible for them to utilise the funds.

Piqued by the zero capital release to the Ministry of Defence and other security agencies, the Senate Chief Whip, Senator Tahir Monguno, recently slammed the Federal Government for the funding gap.

Monguno, during the Senate plenary on Tuesday, accused the government of paying lip service to national security, attributing the development to the escalating insecurity across the country.

“During our ongoing budget defence sessions, we learnt that most MDAs got zero capital release in the 2024/2025 budgets.

“It was discovered that all the security agencies also got zero capital release. It’s high time the government prioritised security funding.

“The president can’t declare emergency in the security sector while the security agencies get zero capital release. I think the government is only paying lip service to national security,” Monguno said on Tuesday.