The anticipated 2023 budget deficit is expected to cost the federal government approximately N11 trillion in borrowing, substantially above the limit outlined in the Fiscal Responsibility Act.
During her Monday appearance before the House of Representatives Committee on Finance to defend the 2023–2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper, Zainab Ahmed, minister of finance, budget, and national planning, made this statement (FSP).
If the federal government continues the gasoline subsidy during the entire fiscal year 2023, she claimed, the government's budget deficit will likely exceed N12.42 trillion.
The 2023 budget plan is based on two choices, Ahmed explained while reeling off figures for the committee.
With regard to the first choice, the deficit is anticipated to increase to N12.41 trillion in 2023 from the budgeted N7.35 trillion in 2022, or 196 percent of total revenue or 5.50 percent of the projected GDP.
Ahmed estimated that the national government would spend N6.72 trillion on subsidy payments as a result of this.
The budget deficit in the second scenario, where the federal government maintains subsidy payments through June 2023, would be N11.30 trillion, or N5.01 trillion of the expected GDP. The PMS subsidy is anticipated to use N3.3 trillion under this option.
The second alternative would require stricter enforcement, the minister added, while the first option is unlikely to be feasible given the current trend.
She stated that both domestic and foreign sources would be used for the new borrowings. According to Ahmed, the government will take on N9.32 trillion in new debt, of which N7.4 trillion will come from domestic sources and N1.8 trillion from foreign sources. Ahmed also stated that the government expects to earn N206.1 billion from the proceeds of privatization and N1.7 trillion in multilateral project-related loans.
Regarding the two plans, Ahmed claimed that their budget deficits were much higher than the limit set by the Fiscal Responsibility Act.
The fiscal responsibility law sets a 3 percent barrier as the upper maximum.©Standard Gazette, 2021. Unauthorized use and/or duplication of this material without express and written permission from this site’s publisher is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Standard Gazette with appropriate and specific direction to the original content.