Buhari to borrow 8.8 trillion naira next year, outlines budget of 20.51 trillion naira

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PRESIDENT Muhammadu Buhari presented the 2023 budget proposal to the National Assembly on Friday in which he proposed new loans totaling 8.8 trillion naira to partly finance a deficit of 10.78 trillion naira. He also reaffirmed his commitment to ensuring a smooth transition to another democratically elected government in 2023.

The total size of the budget is N20.51 trillion, which is N750 billion above the N19.76 trillion approved by the Senate and House of Representatives in the Medium Term Expenditure Framework (MTEF) and the budget strategy document (FSP) adopted Wednesday and Thursday by the two chambers.

President Buhari said, “We expect the total fiscal operations of the Federal Government to result in a deficit of N10.78 trillion. This represents 4.78% of estimated GDP, above the 3% threshold set by the Fiscal Responsibility Act 2007.

“As provided by law, we must exceed this threshold, given the need to continue to address the existential security challenges facing the country.

“We plan to finance the deficit mainly through new borrowing totaling N8.8 trillion; N206.18 billion from privatization proceeds and N1.77 trillion drawn from bilateral/multilateral guaranteed loans for specific development projects/programmes.

“Over time, we have resorted to borrowing to finance our budget gaps. We have used loans to finance essential development projects and programs aimed at further improving our economic environment and improving the delivery of public services to our people.

According to the president, who described the 2023 proposal as a “fiscal sustainability and transition” budget, the main focus in 2023 will be to “maintain fiscal sustainability and ensure a smooth transition to the incoming administration.” .

The 2023 budget parameters and budget assumptions presented by Buhari are based on a benchmark oil price of $70; 1.69 million barrels (including condensate from 300,000 to 400,000 barrels per day) of daily oil production; exchange rate N435.57/$; Expected GDP growth rate of 3.75% and inflation rate of 17.16%.

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The proposed spending of N20.51 trillion naira for FY2023 includes a budget deficit of N10.78 trillion, representing 4.78% of estimated GDP, above the 3%; statutory transfers of N744.11 billion; non-debt recurrent costs of N8.27 trillion; personnel costs of N4.99 trillion; pensions, gratuities and retiree benefits of N854.8 billion; overhead costs of N1.11 trillion; capital expenditure of N5.35 trillion, including the capital component of statutory transfers; debt service of 6.31 trillion naira; and a N247.73 billion sinking fund to repay certain maturing bonds, according to the Joint Estimates Session of the National Assembly.

According to the President, based on these fiscal assumptions and parameters, the total federal revenue to be collected is estimated at N16.87 trillion; total distributable income at the federal level is estimated at N11.09 trillion in 2023, while total income available to fund the 2023 federal budget is estimated at N9.73 trillion, including revenues from 63 state-owned enterprises.

Oil revenue is estimated at 1,920 billion naira, non-oil taxes are estimated at 2,430 billion naira, independent federal government revenue is expected to be 2,210 billion naira; other revenue totals N762 billion, while undistributed government revenue stands at N2.42 trillion.

Buhari also briefed lawmakers on ongoing plans to forward the draft of the proposed amendment to the Finance Bill 2022 alongside the Appropriation Bill 2023, with a view to supporting the achievement of budget projections, tax laws/regulations and current taxes being revised. .

He said: “The Appropriation Bill 2023 is intended to maintain MDAs’ focus on the revenue side of the budget and give greater attention to internal revenue generation. Maintaining the revenue diversification strategy would further increase the share of non-oil revenue in total revenue.

“The proposed expenditure breakdown of 20.51 trillion naira is proposed for the federal government in 2023. This includes expenditure of 2.42 trillion naira from state-owned enterprises.

“Total federal government fiscal operations will result in a deficit of N10.78 trillion, representing 4.78% of estimated GDP, above the 3% threshold set by the Fiscal Responsibility Act 2007.” As provided by law, we must exceed this threshold given the need to continue to address the existential security challenges facing the country.

For his part, Senate Speaker Ahmad Lawan warned of the danger to the economy posed by the monumental loss of oil revenue due to the activities of oil thieves who steal crude oil daily. He said the situation is becoming more unfortunate with the budget deficit estimated at N7 trillion and the bleak prospect of it increasing to around N11.30 trillion as presented in the Medium Term Expenditure Framework 2023-2025/Handout budget strategy (MTEF/FSP) is a factor. in.

“With conflicting figures, projections have estimated our losses from this malaise at between 700,000 and 900,000 barrels of crude oil per day, resulting in a loss of approximately 29-35% of oil revenues in the first quarter of 2022. This represents a Total estimated decline from N1.1 trillion recorded in the last quarter of 2021 to N790 billion in the first quarter of this year.

“The situation has worsened. Recently, the loss of our oil has reached one million barrels per day. Translated into monetary terms, our loss is monumental. The figures show that we are unable to meet OPEC’s daily quota of 1.8 million barrels per day.

Senator Lawan said the oil thieves “are our country’s worst enemies because they have declared war on the country and its people”, adding that it is time for drastic and desperate action against the thieves.

“I am convinced that if we do not take the necessary steps to stop the thieves immediately, our economy will be devastated, as efforts to provide infrastructure and diversification of the economy would both be thwarted,” he said. .

Lawan expressed his optimism that Nigeria can reduce the budget deficit by stopping the theft of crude oil and consider other options to generate more revenue for the government.

“I think it is imperative to review the waivers and concessions that the government has given to the tune of 6 trillion naira. In a difficult time like this, some of the waivers may no longer be justified,” said the President of the Senate.

The Speaker of the House of Representatives, the Honorable Femi Gbajabiamila, reiterated the will of the Ninth National Assembly to “finish strong” by ensuring that the finance bill is adopted before the end of the year.

Gbajabiamila gave assurances that the National Assembly “will not fail, in the quest for timely adoption, to do the due diligence that the Nigerian people expect of us.”

He said, “Reforms of the budget process initiated at the Ninth Assembly have helped streamline the appropriation process and control system. We have set a standard for others to match or meet. It is to the credit of all those who have worked to obtain these results, in particular the senators and the honorable members of Parliament.

“I have often said that a budget reflects priorities. National security, health, education, public infrastructure and human capital development are the priorities we pursued during the Ninth Assembly. Each Appropriation Act we have reviewed and passed has reflected these priorities to varying degrees. The 2023 finance law will be a consolidation budget; our last and best opportunity to ensure that ongoing projects across the country are completed before the end of the administration.

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