By Adedapo Adesanya
President Bola Tinubu on Wednesday wrote to the Senate, seeking to increase the 2024 Appropriation Act by N6.2 trillion.
He is targeting billions from foreign exchange (FX) gains of Nigerian banks for this, effectively increasing the 2024 budget from N28.7 trillion to N34.9 trillion.
The Senate President, Mr Godswill Akpabio, confirmed this development when he read Mr Tinubu’s letter on the floor of the upper legislative chamber today.
In the letter, President Tinubu urged the National Assembly to amend the Finance Act of 2023, specifically targeting windfalls generated by banks from “foreign exchange gains.”
He said his request was aimed at ensuring a fair taxation policy and addressing the profits banks accrue due to fluctuations in foreign exchange rates.
The President noted that the tax would be used to fund capital infrastructure development, education, healthcare access and public welfare initiatives.
“Furthermore, the proposed amendments to the Finance Acts 2023 are required to a one-time windfall tax on the foreign exchange gains realised by banks in their 2023 financial statements to fund capital infrastructure development, education, and healthcare as well as welfare initiatives all of which are components of the Renewed Hope Agenda,” Mr Tinubu’s letter read in part.
Reports showed that top Nigerian Banks raked in a profit of N3.3 trillion in 2023, mostly arising from forex revaluation gains, after floating the Naira and unifying the country’s FX segments in June 2023.
In September 2023, the Central Bank of Nigeria (CBN) barred commercial banks from using the FX gains to pay dividends or for operating expenses.
Now, it appears the federal government, with the proposed amended law, will go after these gains.
In the letter to the lawmakers, Mr Tinubu also proposed allocating N3.2 trillion for infrastructure projects and N3 trillion for recurrent expenditure.
“Pursuant to section 58 (2) of the constitution of the Federal Republic of Nigeria as amended, I forward herewith the above-named bills for consideration and passage by the senate.
“The appropriation act amendment bill seeks to amend the principal act to provide the sum of N3,200,000,000,000 for Renewed Hope Infrastructure Projects and other critical infrastructure projects to be undertaken across the country and the sum of N3,000,000,000,000 to meet further recurrent expenditure requirements necessary for the proper operation of the federal government.
“They shall be funded by accruing to the federal government of Nigeria,” Mr Tinubu noted.
In January 2024, the National Assembly approved the 2024 appropriation bill, which increased its amount from President Tinubu’s planned N27.5 trillion to N28.7 trillion, growing the budget by N1.2 trillion.