2023 Budget: Broke Nigeria to borrow over half of expenditure

2023 Budget: Broke Nigeria to borrow over half of expenditure

By John Eche

Against the backdrop of continuing economic chllenges, Nigeria is primed to borrow over half of its 2023 expenditure needs, The Difference reports.

This is coming on the heels of the pronouncement by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed that the federal government was proposing an aggregate expenditure of N19.76 trillion for the 2023 fiscal year.

The minister who was speaking during the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) interaction with the House of Representatives Committee on Finance, revealed that the budget deficit for the 2023 fiscal year may be between N11.30 trillion and N12.41 trillion.

Total federal government revenue is projected to be N8.46 trillion, of which N1.9 trillion is being expected from oil-related sources.

More details include that the benchmark crude oil price is pegged at $70 per barrel and the exchange rate at N435.57 to the dollar. At the same time, oil production volume was put at 1.69 million barrel per day, real Gross Domestic Product (GDP) growth projected at 3.7 per cent and inflation 17.16 per cent.

Ahmed admits that there are challenges, beginning with the thorny question of budget deficit:

“The budget deficit is projected to be N11.30 trillion in 2023, up from N7.35 trillion in 2022. This represents 5.01 per cent of the estimated GDP above the three per cent threshold stipulated in the Fiscal Responsibility Act (FRA), 2007.

She locates the source of the challenges in the petrol subsidy fiasco, and continuing global challenges occasioned by lingering Covid-19 pandemic effects, as well as higher food and fuel prices due to the war in Ukraine. But there is more:

“Overall, fiscal risks are somewhat elevated, following weaker-than-expected domestic economic performance and structural issues in the domestic economy.

“Crude oil production challenges and PMS subsidy deductions by NNPC constitute a significant threat to the achievement of our revenue growth targets; as seen in the 2022 Performance up to April.

Nigeria’s GDP was put at $440BN in2021 with unemployment rate at 35%. The interest rate was 1.4% and both debt to revenue and debt to GDP were at the threatening 96% and 37.0% levels.

Minister of Finance, Ahmed