FG proposes a N19.76 trillion budget for 2023, with a projected deficit of N12.41 trillion.

Ibekimi Oriamaja Reports

According to Mrs. Zainab Ahmed, Minister of Finance, Budget, and National Planning, the federal government is recommending a total expenditure of N19.76 trillion for the fiscal year 2023.

However, the minister who disclosed this at the interaction with the House of Representatives Committee on Finance regarding the 2023–2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) said she might not be able to make provisions for treasury funded capital projects in the 2023 fiscal year.

Ahmed further stated that, depending on the decision the federal government makes on the subject of fuel subsidy payment, the budget deficit for the 2023 fiscal year may range between N11.30 trillion to N12.41 trillion.

According to her, the federal government anticipated total revenue of N8.46 trillion, of which N1.9 trillion was anticipated to come from sources connected to oil and the remaining N4 trillion from sources unrelated to oil.

In addition, oil production was estimated at 1.69 million barrels per day, real Gross Domestic Product (GDP) growth was forecast at 3.7%, and inflation was estimated at 17.16% in the MTEF, according to Ahmed. The benchmark crude oil price was set at $70 per barrel.

Based on the 18-month extension announced early in 2021, she claimed that the petrol subsidy would continue through mid-2023, in which case just N3.36 trillion would be allocated for it in the next fiscal year.

The minister also emphasized that Nigeria has consistently been able to service its debt without going into default. He continued by saying that there are no projections for Nigeria to default on its debt obligations, not even in the near future.

Further, Ahmed stated that although the amount now being utilized to service the nation’s debt had exceeded what had been allocated in the budget, steps had been taken to control the problem.

She bemoaned the fact that the country’s inability to generate sufficient income but stated that efforts will be made to increase the effectiveness of tax administration and collection.

She continued by saying that the performance management system for Government Owed Enterprises (GOEs) would be more strictly enforced, which would result in a considerable increase in operating surplus/dividend remittances in 2023.

According to Ahmed, the budget deficit will increase from N7.35 trillion in 2022 to N11.30 trillion in 2023. Above the three percent threshold outlined in the Fiscal Responsibility Act (FRA), 2007, this amounts to 5.01% of the anticipated GDP.

This deficit level is predicated on the implementation of reforms to gasoline subsidies starting in the middle of 2023, when the subsidies are scheduled to be suspended. The draft 2023–2025 MTEF/FSP was created in response to the ongoing worldwide issues brought on by the consequences of the Covid-19 epidemic as well as increased food and fuel costs as a result of the conflict in Ukraine.

“Overall, budgetary risks are relatively increased due to the domestic economy’s fundamental problems and weaker-than-expected performance.

As evidenced by the 2022 Performance up to April, “Challenges in crude oil production and PMS subsidy deductions by NNPC constitute a substantial threat to the attainment of our income growth ambitions.

“At the national and sub-national levels, challenges of income underperformance and expenditure efficiency urgently require bold, clear, and quick action. Despite these obstacles, the Nigerian economy has maintained its recovery from recession for six quarters. In the second quarter of 2022, this increased from 3.11 percent in the first quarter to 3.54 percent. The majority of the economy’s sectors experience growth.

In response to inquiries about oil theft and its effects from members of the Committee chaired by Hon. James Faleke, the minister stated that what happened in 2022 clearly demonstrated that the nation was not receiving value from its expenditures on oil as production continues to decline, necessitating the need to take alternative action.

However, Ahmed asserted that regulators, the Nigerian National Petroleum Company (NNPC), and security agencies had been working hard to find answers.

“Based on the performance in April, which was 1.3 million barrels per day and increased to 1.4 million by July, we do hope that the rise will be extremely considerable because it is costing us more than N3.2 billion in revenue loss and security costs.

“As of April, the oil and gas revenue is performing very poorly, at 39%. Oil and gas revenue needs to be moved, she added.

The minister emphasized that the Company and Allied Matters Act and the Petroleum Industry Act have given NNPC Limited some degree of independence from the nation.

“NNPC Limited will now be responsible for a large portion of the expenses that the federation formerly handled. In the medium run, we think the federation will wind up making more money since NNPC would be paying taxes and dividends.

It also implies that the NNPC will have to seek out independent financing. The company’s efficiency will increase as a result. They are now required to pay the federation dividends and royalties, which they previously did not.

When asked about the state of the world economy, she stated: “We are forecasting that there will be ongoing pressure on prices given the rising inflation and the apparent continuation of the conflict between Russia and Ukraine. Looking at ways to apply pressure to the inflationary tendency is what we need to do.

“While we predicted $70 per barrel, the actual price of crude oil is now $103 per barrel, while organizations who specialize in forecasting oil prices, such the International Energy Association (IEA), predict a fall in oil prices by 2023.

“In terms of output, we anticipate 1.69 million barrels daily. We hope it works out because according to the NNPC’s prediction, all of the current initiatives will lead to greater production. The deficit scenario we are currently in will get worse if it doesn’t.

Regarding the Moroccan-Nigerian gas pipeline, she stated: “Funding for the feasibility study was granted by the Federal Executive Council a few weeks ago, so it is still in the feasibility study stage. The information is available from the National Oil Company.

The committee’s chairman, Faleke, had earlier stated that the government needed to study all possible revenue sources due to the country’s precarious financial situation.

He stated that it was apparent that every element of the nation suffered when there was a lack of revenue and he wanted all agencies testifying before the committee to provide the committee the accurate situation of their revenue.

He issued a warning that no government agency would be permitted to manipulate national finances.

The House of Representatives has accused the Office of the Accountant General of the Federation of failing to effectively track and record the revenue collected by government institutions.

Faleke asked the Director, Federation Account in the office of the AGF to give the committee the most recent records of revenue remittances by the Federal Road Safety Commission while speaking at the 2023–2025 MTEF/FSP interaction with MDAs. However, the Director said they needed more time to provide the records.

Federal Roads Safety Commission Acting Corp Marshal Dauda Biu told the MPs that the agency sent more than N2 billion to the Federations Account in 2021.

However, according to the Committee’s documents from the Accountant General, the amount is closer to N1.6 billion.

Faleke voiced unhappiness with the AGF office’s response as a result.

“To be very honest, we are not thrilled at all with the accountant general’s office,” he stated. We believed that we could rely on your data to carry out our work. The agencies are present and prepared to present. I lack the records to compare against.

“You claim that receipts are provided to numerous offices across the nation, but you don’t have the paperwork to back that up. It ought to be automatic. Please let us know if you run across any problems. We’re here to support both you and Nigerians in general. You listened to the Minister of Finance’s presentation on the N11.3 trillion deficit.

Therefore, the deficit will decrease if we are able to obtain our money from the agencies. Since we have so many agencies, you should be taking payments online automatically. The Accountant General is unable to give us requirements, hence we are unable to proceed.

“You provide them with receipts, which may be phony in any case. In this day and technology, how are treasury receipts still being written by hand? It is quite depressing. We have additional work to perform in for a and must complete it before to the budget presentation, which will take place in early September.

In her contribution, a member named Hon. Sada Soli expressed concern over the behavior of the Office of the Accountant General staff, charging that they consistently sought to thwart the National Assembly’s efforts to track government revenue.

In order to allow the committee to complete its job, Faleke ordered the Accountant General to provide the committee with information about all remittances from the agencies by August 30.