The Federal Government has given an indication of its readiness to borrow from both local and foreign sources to finance the N6.258 trillion deficit in the proposed 2022 budget. This is just as President Muhammedu Buhari presented a total budget of N16.39 trillion for 2022 to a joint session of the Senate and the House of Representatives. According to the budget proposal tagged “Budget of Economic Growth and Sustainability, it has a Budget deficit estimated at N6.23 trillion. On parameters and fiscal assumptions of the 2022 Appropriations Bill, the President explained that same was based on the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper. According to Buhari, Oil price benchmark is pegged at $57 per barrel; oil production estimate is put at 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); Exchange rate at N410.15 per dollar; and projected GDP growth rate at 4.2 per cent and 13 per cent inflation rate.
The President explained that based on these fiscal assumptions and parameters, total federally-collectible revenue was estimated at N17.70 trillion Naira in 2022, even as he said further that while total federally distributable revenue is estimated at 12.72 trillion Naira, total revenue available to fund the 2022 Federal Budget was estimated at 10.13 trillion Naira, an amount which includes Grants and Aid of 63.38 billion Naira, as well as the revenues of 63 Government-Owned Enterprises. According to him, Oil revenue is projected at 3.16 trillion, Non-oil taxes estimated at 2.13 trillion Naira and FGN Independent revenues projected at 1.82 trillion Naira. President Buhari said that out of the total expenditure of N16.39 trillion Naira proposed for the Federal Government in 2022, N768.28 is for Statutory Transfers of 768.28 billion Naira; N6.83 trillion is for Non-debt Recurrent Costs; and N4.11 trillion for Personnel Costs. Others are N577.0 billion for Pensions, Gratuities and Retirees’ Benefits; N792.39 for Overheads; N5.35 trillion for Capital Expenditure, including capital component of statutory transfers; N3.61 trillion for Debt Service; and N292.71 billion Naira for Sinking Fund to retire certain maturing bonds.
Presenting the budget, Buhari said that Defence and internal security will continue to be our top priority, even as he promised that the government will remain firmly committed to the security of life, property and investment nationwide as well as continue to ensure that the nation’s gallant men and women in the armed forces, police and paramilitary units are properly equipped, remunerated and well-motivated. He said allocations to MDAs in the budget were guided by the strategic objectives of the National Development Plan of 2021-2025. According to him, the plan includes diversifying the economy with robust MSME growth; investing in critical infrastructure; strengthening security and ensuring good governance; enabling a vibrant, educated and healthy populace; reducing poverty; and minimising regional, economic and social disparities. President Buhari, though deferred presentation of the details to a later date, but promised that his Ministers of Finance and National Planning, will avail the lawmakers same, at another forum, as he defended the piling foreign and domestic debts.
Minister of Finance, Budget and National Planning, Zainab Ahmed, during a press conference after the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari in Abuja said that the Federal Executive Council (FEC) has approved the 2022 Appropriation Bill with an aggregate expenditure of N16.39 trillion., saying that this will aid the funding of the Federal Government’s infrastructure projects. Ahmed during the press briefing said, “Government has been borrowing before this administration and continues to borrow and it is important that we borrow to provide developmental projects in the form of roads, rails, bridges, power and water for sustainable development in this country. “If we just depend on the revenues that we get, even though our revenues have increased, the operational expenditure of government, including salaries and other overheads, is barely covered or swallowed up by the revenue.” In her defence of the frequent borrowings by the federal government despite concerns raised from different quarters, the minister said the move is necessary to be able to build projects and to ensure they are developed on a sustainable basis insisting that the total size of the borrowing is still within healthy and sustainable limits.
She said “Nigeria’s borrowing, has been of great concern and has elicited a lot of discussions. But if you look at the total size of the borrowing, it is still within healthy and sustainable limits. As of July 2021, the total borrowing is 23% of GDP. When you compare our borrowing to other countries, we’re the lowest within the region, lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola. We do have a problem with revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil have performed, as of July, at the rate of 111%, which means outperforming the prorated budget.” Recall that yesterday, the two chambers of the National Assembly approved President Muhammadu Buhari’s revised proposal of the 2022-2024 Medium Term Expenditure Framework (MTEF-FSP) and also okayed N16.39 trillion federal budget proposal for 2022. President Muhammadu Buhari had a few days ago announced plans to present the 2022 Appropriation Bill to a joint session of the National Assembly on Thursday, October 7, 2021. The early submission of the budget by the President is in line with the Federal Government’s effort to have the appropriation bill out on time and follow through with the January to December budget cycle. Experts and many Nigerians have criticised the current administration’s accumulation of debt which sees a large chunk of the federal budget used for debt servicing.