The president of the Federal Republic of Nigeria, President Muhammadu Buhari yesterday presented the 2023 budget proposal to the National Assembly, in which he proposed new loans totaling N8.8 trillion to partly finance a deficit of N10.78 trillion.
The total budget size is N20.51 trillion which is N750 billion above the N19.76 trillion approved by the Senate and the House of Representatives in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) passed on Wednesday and Thursday by both chambers.
According to President Buhari, while presenting the Budget, he said: “We expect total fiscal operations of the Federal Government to result in a deficit of 10.78 trillion naira. This represents 4.78 percent of the estimated GDP, above the three percent threshold set by the Fiscal Responsibility Act 2007.
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“As envisaged by the law, we need to exceed this threshold, considering the need to continue to tackle the existential security challenges facing the country.
“We plan to finance the deficit mainly by new borrowings totaling 8.80 trillion naira; 206.18 billion naira from privatization proceeds and 1.77 trillion naira drawdowns on bilateral/multilateral loans secured for specific development projects/programs.
“Over time, we have resorted to borrowing to finance our fiscal gaps. We have been using loans to finance critical development projects and programs aimed at further improving our economic environment and enhancing the delivery of public services to our people.”
According to president Buhari, he described the 2023 proposal as a budget of ‘Fiscal Sustainability and Transition’. He therefore noted that the principal objective in 2023 will be to “maintain fiscal viability and ensure a smooth transition to the incoming administration.”
The intention of the federal government to borrow loans to clear up the budget deficit was necessitated when Senate President Ahmed Lawan lamented on the increasing trend of deficits in the nation’s budget.
The budget deficit in the current 2022 budget is about N7 trillion while the 2023 budget is N10.78 trillion.
Senator Lawan further noted that the situation becomes more unfortunate if the government factor in the Budget deficit estimated at N7 trillion and the grim prospect of its increase to about N11.30 trillion as presented in the 2023 – 2025 Medium Term Expenditure Framework / Fiscal Strategy Paper (MTEF/FSP).
He said, “Your Excellency, we can reduce the deficit by stopping the oil theft. We can also consider other options to source more revenues for the government. Lawan suggested as he looks for measures to curb the deficits.
With conflicting figures, projections have put the country’s losses from this malaise at between 700,000 to 900,000 barrels of crude oil per day, leading to about 29 to 35 percent loss in oil revenue in the first quarter of 2022.
This represents an estimated total fall from N1.1 trillion recorded in the last quarter of 2021 to N790 billion in the first quarter of this year.
Lawan noted that oil theft has worsened recently as the loss has reached 1 million barrels per day, affecting efforts to meet the OPEC daily quota of 1.8million barrels per day.