The Lagos Chamber of Commerce and Industry (LCCI) has flawed Federal Government’s plans to finance the N10.78 trillion deficit estimates in the 2023 proposed budget through new commercial loans and drawdown on bilateral and multilateral loans.
The Chamber, in a statement issued on Sunday and signed by its Director-General, Dr. Chinyere Almona, described the fiscal approach as undesirable, especially at a time when Nigeria was already placed on the watch lists of some of our foreign bondholders, and the world was still considering President Buhari’s well-publicized call for debt cancelation at the last United Nations General Assembly.
The LCCI stated: “It is the exclusive use of debt to finance deficits that got us into the situation where we cannot keep the revenue we are earning today, as we use the bulk of our revenue to settle interest payments, and it is increasingly not enough to cover the interest payments.
“In the 2022 year-to-April, the interest payments were more than the revenue, and it is most unlikely that the revenue will be more than interest payments in in the full-year 2022 or even in 2023”, it added.
On the revenue and expenditure estimates in the 2023 budget estimates presented by President Buhari to the National Assembly on Friday, the Chamber pointed out that though the N20.5 trillion proposed expenditure reflected existing needs in critical sectors of the economy, the proposed revenue of N9.73 trillion did not reflect the government’s peak revenue performance of N6 trillion in 2021.
The organized private sector (OPS) advocacy group further stated that it was most unlikely that the federal government will get that N6 trillion this fiscal year (2022) as only N1.6 trillion was reported in the first four months of the year, thereby projecting that N9.73 trillion revenue in 2023 is therefore a mystery.
It explained: “Even if we are lucky enough to generate the N9.73 trillion, we must also discount the N6.3 trillion projected interest payments out of it to leave us with a N3.43 trillion net revenue against the N14.21 trillion non-debt spending. This explains why the President is proposing a deficit of N10.78 trillion.”
On what it considers should be the way out of the fiscal challenge, the LCCI advised that the government’s approach should not be to continue issuing only debt, especially with the increasingly unbearable burden of interest payments that exposes our fiscal vulnerably but it should consider massive equity financing as the preferred choice in funding yearly budgets.
In addition, it canvassed sundry other measures, including the need for governments at all levels to put actionable policies in place to address the high costs of fuels and food while also giving serious attention to investing more on transport infrastructure in resolving the many logistical challenges that have impacted the movement of goods across the nation.
The Chamber also advised that looking beyond oil revenues the country can enhance its forex earnings through increased inflow of foreign direct investments as well as invest more in infrastructure and critical port reforms to reduce the bottlenecks in our export logistics and processes that will boost non-oil production and exports.
While lauding the government for allocating N470 billion to revitalize the tertiary institutions and enhance salaries of university staff, the Chamber noted that the current funding model for our universities was no longer sustainable in the face of the many revenue challenges being tackled by the government.
On the most significant components of human development, the LCCI urged the governments at all levels to remain consistent in funding education, health, infrastructure, and security.
Similarly, the Chamber stressed the need to immediately block revenue leakages by curbing oil theft, pipeline vandalization, and trimming excessive fuel, power, gas, and forex subsidies, as well as massive tax and duty waivers to lift revenue to N20 to N30 trillion thresholds from the present N6 to N10 trillion thresholds.
