The Centre for the Study of Economies of Africa (CSEA), a research firm with focus on economic development trends in African countries, particularly Nigeria, has charged the Federal Government to commit more funds to capital projects for sustained improved economic outcomes for the country.
The research firm, in its latest Nigeria Economic Update Issue 34 sourced by our correspondent on Tuesday cautioned that consistently skewing a greater proportion of yearly budgets, as proposed in the 2022 Budget Call could lead to the limited effectiveness of fiscal policy which is even more dire as an expansionary fiscal policy is required to spur aggregate supply.
The CSEA based its recommendations for improved capital budget expenditures on the Budget Call which sets out the requirements and instructions that must be satisfied and followed in the preparation of the 2022 Federal Government of Nigeria (FGN) Budget Proposal.
Specifically, the research firm noted that the key highlights of the Budget Call as including a projected total FGN revenue of N8.762 trillion, an aggregate expenditure projected at N13.98 trillion – consisting of N3.61 trillion in debt services, N6.21 trillion in recurrent expenditure, and N3.61 trillion in capital expenditure.
It further stated: “Consequently, recurrent expenditure is expected to be 72.02% higher than capital expenditure and this may hinder the creation of new investment and limit the availability of funds for key infrastructural development.
“The skewed proportion of the budget towards recurrent expenditure could lead to the limited effectiveness of fiscal policy which is even more dire as an expansionary fiscal policy is required to spur aggregate supply.
“Therefore, it is important that the government increases the proportion of its budget to capital expenditure for improved economic outcomes”, the research firm advocated.
