The Federal Government may need to create a supplementary budget to cover the proposed minimum wage increase for workers, as the negotiated amount might exceed the original 2024 budget.
This suggestion comes from the International Monetary Fund (IMF) in its latest report on Nigeria. The report noted that a supplementary budget might be necessary due to ongoing wage negotiations, which could result in costs beyond the 2024 budget's provisions. The IMF also mentioned that the government might need to raise domestic and external borrowing limits to avoid new borrowings from the central bank.
The new minimum wage has been a contentious issue between Organized Labour and the government, especially amid the challenging economic conditions. Reforms such as the removal of fuel subsidies and the unification of the foreign exchange market have increased the cost of living.
Labour leaders are pushing for a minimum wage of N615,000, up from N30,000, though the tripartite committee might recommend N70,000. The government has allocated N6.48 trillion for personnel costs in the 2024 budget, but the IMF believes this may not be sufficient.
The IMF also pointed out that Nigeria is likely to exceed its 2024 budget deficit projections due to implicit subsidies for fuel and electricity and rising interest expenses on debt. Finance Minister Wale Edun has stated that the government aims to reduce the budget deficit from 6.1% in 2023 to 3.8% in 2024.
However, the fiscal deficit expy Jo hi for 2024 is expected to be higher for oil and gas revenue projections, higher subsidies, the suspension of certain excise measures, and increased interest expenses.
