The Government of the Nigerian Federation is proposing a budget of N19.76tn for Fiscal Year 2023.
With deficit at over 100%, hovering between N11.30tn and N12.41tn, the Federal Government may, Nigeria would need to borrow to finance it, and that could raise Nigeria’s total debt to a record N54.01tn.
Nigeria’s current debt is N41.6tn, according to the 2022 first quarter data from the Debt Management Office.
The debt will likely exceed the three per cent limit prescribed in the Fiscal Responsibility Act, which was earlier overshot by the current administration in 2020.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said in Abuja on Monday, that the government might be unable to provide for treasury-funded capital projects next year, especially due to dwindling revenue and payment of subsidy on Premium Motor Spirit popularly known as petrol.
Ahmed, in her presentation to the House of Representatives’ Committee on Finance at the hearing on the proposed 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper, expressed concern that crude oil production challenges and the petrol subsidy deductions by the Nigerian National Petroleum Company Limited (formerly Nigerian National Petroleum Corporation) constituted a major threat to the country’s revenue growth targets.
She stated that bold, decisive and urgent action must be taken to address revenue under performance and expenditure efficiency at the national and sub-national levels.
The minister said, “In this scenario, the budget deficit is projected to be N11.30tn in 2023, up from N7.35tn in 2022. This represents 5.01 per cent of the estimated GDP (Gross Domestic Products), above the three per cent threshold stipulated in the Fiscal Responsibility Act, 2007.”
She noted that the business-as-usual scenario assumes that subsidy on petrol, which is estimated to be N6.7tn for a full year, will remain in 2023 and be fully provided for, while another scenario is the reform scenario which assumes that petrol subsidy will remain up to mid-2023 based on the 18 month extension announced early 2021, in which case, only N3.6tn will be provided for.
Commenting on the dwindling revenue and the high subsidy bill, the Chief Executive Officer, Center for the Promotion of Private Enterprise, Muda Yusuf, in an interview with The PUNCH said, said that already the debt service had exceeded government’s revenue.
He stated, “The new borrowing proposal would worsen an already bad debt situation. Already, debt service has exceeded government revenue, going by the financial report of the Federal Government as of April this year. We are already at a debt threshold that is not sustainable. The economy is on the verge of bankruptcy. The deepening of the debt crisis could crystallise the bankruptcy risk.”
Commenting on the revenue challenge this morning during a Live television programme – AIT Kaakaki – programme monitored by LAMPRACE, a public affairs analyst, Dahiru Majid, drew the attention of Nigerians, and especially the presidential candidates, on the urgency to embrace economic nationalism, to make real meaning of Nigeria’s political nationalism.
Majid asserted that neo-liberal capitalism, on whose mantra, Nigeria’s economy is being operated would not give Nigerian lives or economy the needed lifts.
The time has come, he opined, to agree and walk that not-so-popular path that ‘government indeed has business in business.’ Nigeria, he stated, needs to urgently retrace steps, by renationalizing some of the sold enterprises, retool these enterprises, through disciplined private partnership, and improve the country’s earnings through investment revenues, beyond taxation.
Mr. Majid called on the Nigerian electorate to critically interrogate Candidates Bola Ahmed Tinubu of the APC, Peter Obi of Labour, and Atiku Abubakar of the PDP, on what they offer to do differently, to chart a better future for the Nigerian economy.