FG may exceed N6.04trn domestic borrowing to finance 2024 budget – Comercio

The federal government may exceed its projected N6.04 trillion domestic borrowing to finance the 2024 budget due to the minimised use of the ways and means window.

Comercio Partners Limited, an investment banking firm, disclosed this during a media launch to present the firm’s macroeconomic outlook for 2024 themed, “Finding Rain in Drought”.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, recently said that the apex bank would no longer give ways and means to the government until the previous loans were repaid

Under the previous administration, the then CBN Governor, Godwin Emefiele, allegedly printed the sum of N22.7trn for former President Muhammadu Buhari under ways and means, which was the money that the CBN lent to the FG to finance shortfalls in its budget.

According to the report, the 2024 budget has a deficit of N9.05trn, down from N11.60trn the previous year. This deficit is expected to be funded through a combination of domestic borrowing of N6.04trn, foreign borrowing of N1.77trn, multilateral/bilateral loan drawdowns of N941.19bn and privatisation proceeds of N298.49bn.

However, Comercio Partners in its report, noted that it anticipated that the FG might surpass domestic borrowing estimates, especially as it sought to minimise the use of the ways and means window.

In its review of the Nigerian Stock Exchange, it noted that it expected a bullish start to the year fueled by investors’ anticipation of the 2023 financial year results and dividend reinvestment.

However, in the latter part of the year, it said market sentiments were likely to be shaped by a confluence of factors, including improved foreign exchange conditions, the stance of the Monetary Policy Committee regarding inflation, yield movement in the fixed income market and corporate disclosures.

“Regarding the sectoral outlook, we remain bullish on the banks owing to the high-interest rate environment and operational efficiency. In the oil and gas sector, we anticipate continued revenue growth for oil marketers in 2024FY, primarily anchored by anticipated increases in product prices.

“Following the lifting of the FX ban on the 43 items in 2023, we foresee the influx of imports, intensifying competition and diluting demand for local players like OKOMUOIL and PRESCO. Cautious optimism characterises our view on the consumer goods sector, with an expectation of sustained robust revenue growth in 2024FY, hindered however by inflationary pressures,” it said.