Despite declining tax collections, the federal government’s fiscal deficit increased by almost a thousand percent during the presidency of President Muhammadu Buhari.
According to the 2023 Appropriations Bill, the fiscal deficit—the difference between earned revenue and expenditure—will amount to N10.78 trillion the following year. The amount will increase the growth imbalance from 2016, when it was N1.027 trillion, to N947%.
The 2016 budget, dubbed the “budget of Change,” was created and fully implemented by the present administration as its first annual fiscal appropriation.
The President has proposed a total spending budget of N20.52 trillion for the upcoming fiscal year, of which N9.73 trillion would be covered by revenue and the remaining N10.78 trillion, or 52.5%, would be paid for by new borrowings, drawbacks from previous commitments by multilateral and bilateral partners, as well as proceeds from privatization.
With the exception of 2016, when N5.9 billion was realized from the source, privatization proceeds have been a consistent financing line item on the revenue sources.
In the past, real performance has consistently outperformed projected deficits while revenue has fallen short of expectations. The appropriations package for the upcoming fiscal year has already been discredited by several academics.
The country has never even considered such a large deficit. It follows rapidly rising expenses and nearly stagnant revenue.
The Federal Government’s generated revenue increased by 72% between 2016 and 2021, the latest completely completed budget, from N3.855 trillion to N6.637 trillion. The nation is a few months late when it comes to the current budget cycle’s end. However, the government made N1.63 trillion in revenue during the first four months while spending N4.72 trillion, N1.94 trillion of which went toward debt payment.
In order to pay off its debt, the government aims to spend N6.31 trillion, or 65% of its anticipated revenue for the following year, while investing N5.35 trillion in capital projects.
Using worldpopulationreview.com’s estimate of the nation’s population (218.8 million), the government would spend N24, 541 on capital projects per person in 2019.
Spending on every Nigerian’s education, power, roads, and other capital items is capped at N24, 541 in the upcoming year.
The chairman of Edgefield Capital Management Limited, Gboyega Nasir Isiaka, commented on this yesterday and claimed that the lending of infrastructure investment was a far cry from what was needed to promote growth and development.
Isiaka stated: “We must allocate the same amount of money for infrastructure as we do for economic development. Reducing recurrent expenses will enable you to fund CAPEX more effectively. Practically speaking, we must control our spending and dismantle connections to government funding.”
The budget is unfit for purpose, according to economist and investment banker David Adonri, who said as much in a statement to The Guardian yesterday. The budget will undoubtedly be examined and amended by the following national administration. He stressed that the budget proposal’s dramatic expansion is at odds with the current state of the economy, which is prone to downturn.
