The Nigerian Fiscal plan for the year 2022 set out on a budget of N17.13trn, 18 percent higher than the expenditure for the previous year. The budget which had initially highlighted a deficit of N6.39trn later projected a deficit of N7.157trn after the ministry of finance reviewed the expected revenue for the year downward to N9.97 trillion from N10.74trn. The budget had also included a recurrent non-debt spending of N6.91trn, capital expenses of N5.96trn and debt servicing of N3.61trn.
The deficit review as contained in the budget call circular released by the ministry of finance on August 5, in preparation for the year 2023, was partly informed by the government earnings (N1.63trn) for the first four months which significantly fell short of the expected revenue of N3.32trn despite N4.72trn expenses made within the same period. This generally impacted other elements of the fiscal provision.
The projected oil production for the year was reviewed downward from 1.88mbpd to 1.66mbpd while the estimated oil price was reviewed upward from $62pb to $73pb. Naira exchange rate maintained the initial estimate of N410.15 to a dollar, whereas the projection for inflation rate went south to 16.11 percent from 13 percent.
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Furthermore, the Nominal consumption was reviewed to N120.17trn from N119.28trn and Nominal GDP adjusted to N198.93trn from N184.38trn earlier budgeted for and the projected GDP growth rate was pegged at 3.55 percent against 4.20 percent earlier projected at the beginning of the year.
By Q3, oil production dropped to less than 1mbpd but later improved to 1.01mbpd in October; oil price recorded a spike at $106.34pb in August but later dropped to $93.25pb in September and in October it further increased to $96.57pd. The inconsistency in oil production and the consistent fall in oil revenue have been generally attributed to increasing oil theft and public property vandalism in the Niger-Delta region.
As at December 20, the Naira exchanges to a Dollar at N450.35 official rate and over N750 at the parallel market. The annual inflation rate reached 17 years all time high at 21.47 percent in November which is a far cry from the 16.11 percent earlier projected for. According to Afrinvest’s report on Nigeria’s public debt outlook for Q322, Nigeria’s public debt profile increased by N4.5trn with domestic borrowing accounting for more than 70 percent of this new increase; the report also reveals that the debt-service-to-revenue ratio was already at 83 percent for the Q3 and may hit 91.8percent by the end of the year.
The Budget office of the federation had earlier reported that the 2022 budget seeks to continue the reflationary policies of the 2020 and 2021 budgets, hence was prepared using zero-based budgeting approach based on the policies/strategies contained in the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
A Snapshot of Nigeria’s Expenditure Performance for the 2021 Fiscal Year and Projections for 2022