Nigeria to borrow 8.8 trillion naira in 2023 to finance its budget

By on October 8, 2022 0

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 10.78 trillion naira.

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.

According to President Buhari, during the presentation of the budget, he 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.

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“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 President Buhari, he described the 2023 proposal as a “fiscal sustainability and transition” budget. He therefore noted that the main objective in 2023 will be to “maintain fiscal sustainability and ensure a smooth transition to the incoming administration”.

The federal government’s intention to borrow loans to fill the budget deficit was necessitated when Senate Speaker Ahmed Lawan complained about the growing trend of deficits in the national budget.

The budget deficit in the current 2022 budget is about 7 trillion naira, while the 2023 budget is 10.78 trillion naira.

Senator Lawan further noted that the situation becomes more unfortunate if the government takes into account the budget deficit estimated at 7 trillion naira and the bleak prospect of its increase to around 11.30 trillion naira as presented in the context of medium-term expenditure 2023-2025 / budget strategy document. (MTEF/FSP).

He said, “Your Excellency, we can reduce the deficit by stopping the theft of oil. We can also consider other options to generate more revenue for the government. Lawan suggested as he was looking for measures to reduce deficits.

With conflicting figures, projections have estimated the country’s losses from this malaise at between 700,000 and 900,000 barrels of crude oil per day, leading to a loss of around 29-35% in oil revenues in the first quarter of 2022.

This represents an estimated total fall of 1.1 trillion naira recorded in the last quarter of 2021 to 790 billion naira in the first quarter of this year.

Lawan noted that oil theft has worsened recently, with the loss reaching 1 million barrels per day, affecting efforts to meet OPEC’s daily quota of 1.8 million barrels per day.