By Charles Ebi
Federal Government has set a target to generate N82.7bn from the recovery of looted funds to finance the 2025 budget.
The amount is contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper submitted by President Bola Tinubu to the National Assembly.
The MTEF povides the basis for annual budget planning and consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.
The document, prepared by the Ministry of Budget and National Planning, also sets out the underlying assumptions for these projections, provides an evaluation and analysis of the previous budget and presents an overview of consolidated debt and potential fiscal risks.
The recovery of looted fund is an initiative that is part of a broader strategy of the Federal Government to address the country’s mounting fiscal challenges, diversify revenue sources, and curb over-reliance on debt financing.
According to projections, the recovered funds will contribute significantly to the government’s budgets in the three year period.
According to the MTEF, about N82.704bn is being targeted from recovery of looted funds as well as fines in 2025. The amount is projected to increase by about N25bn to N107.5bn in 2026.
The move comes at a time when Nigeria faces critical revenue challenges, including declining oil revenue, a widening fiscal deficit, and growing public debt.
Oil, which historically accounts for the majority of Nigeria’s earnings, has faced price volatility, production cuts under OPEC agreements, and theft in the Niger Delta. This has significantly reduced the country’s foreign exchange earnings and put pressure on the economy.
The National Bureau of Statistics had Monday said the real growth of the oil sector was 5.17% (year-on-year) in the third quarter of 2024, indicating an increase of 6.02% points relative to the rate recorded in the corresponding quarter of 2023 ,-0.85%, the NBS said.
Thr NBS said the growth decreased by 4.98% when compared to the second quarter figure.
Despite efforts to expand the tax net, Nigeria has one of the lowest tax-to-GDP ratios in the world, hovering around six per cent to seven per cent. This undermines government efforts to generate sustainable non-oil revenue.
Rising public debt has strained the country’s revenue, with debt servicing consuming a significant portion of government earnings.
According to recent reports, over 90% of revenue was spent on debt obligations, leaving little room for developmental projects.
Efforts to diversify the economy into agriculture, manufacturing, and technology have also been slow to yield substantial results, leaving Nigeria vulnerable to external shocks.
The target from looted funds is a critical part of the government’s strategy to plug revenue gaps and fund essential sectors.
These funds, according to findings, are expected to support infrastructure development, healthcare, education, and social programmes.
Additionally, they are expected to help in reducing borrowing needs and improve fiscal sustainability.
Economic analysts have lauded the government’s initiative but emphasize the need for transparency and accountability in recovering and utilizing these funds.
The medium-term fiscal strategy takes account of current events with important implications for the government’s ability to raise revenues, finance its expenditures and manage its debt.
The government said it recognizes the need to cushion the effects of economic reform measures on the poor and economically vulnerable in ways that create opportunities for job creation, increased productivity and inclusiveness.
Nigeria currently faces significant revenue challenge. The tax to GDP ratio is below the Africa average and among the lowest in the world.
This has resulted to perennial fiscal deficit and reliance on borrowing to finance federal government budgets.
Domestic revenue mobilization efforts have overtime been constrained by low tax rates, weak tax administration and high tax expenditures.
In the medium term, the Federal Government said in the document that “it will adopt more innovative ways to expand government’s fiscal space, diversify revenue sources and raise the revenues required to finance its expenditure.
“It is expected that growth, in the medium term, will generate the revenue necessary for future expansion of public service delivery, rebuild fiscal space, and narrow new borrowing requirement.
“Higher revenue collections would enable the government to deliver public services more effectively, enhance infrastructure investment, improve investment in human capital booster establish fiscal buffers”.
About $50m assets repatriated from the United States of America ,USA, will be used to support Rural Electrification Projects in the country.
The Attorney-General of the Federation ,AGF, and Minister of Justice, Prince Lateef Fagbemi (SAN) made the disclosure on Friday in Abuja, during the formal signing ceremony of the Asset Return Agreement between Nigeria and the USA.
He said the assets were linked to a former Petroleum Resources Minister, Mrs Diezani Alison-Madueke, and her associates ,the Galactica Assets.
Signing on behalf of Nigeria, Fagbemi observed that the deployment of the fund would increase the reliability and availability of renewable energy in Nigeria.
Besides, the Minister described the signing of the agreement as a significant affirmation of the resolve of President Bola Tinubu to build a Nigeria that is free from the shackles of corruption, and to ensure available resources are devoted to socio-economic development of the nation.
He described the event as not only a testament to the unwavering commitment of the country’s fight against corruption, but also that of the U.S. in facilitating restitution and supporting integrity and accountability in governance.
“The Asset Return Agreement being executed today also ensures that the returned assets are applied directly to developmental projects. As agreed, $50m of the repatriated funds will be utilized through the World Bank, to partly fund the Rural Electrification Project to increase the reliability and availability of renewable energy in Nigeria.
“While the balance of $2.88m will be disbursed as a grant by Nigeria to the International Institute for Justice ,IIJ, to support ‘the Rule of Law and Counter-Terrorism Project’, through counter-terrorism capacity building for Criminal Justice Sector Practitioners in East, West, and North Africa”, he added
