….records N3.09trn deficit in 2022 budget in four months
The Federal Government has proposed a budgetary provision of N6.72 trillion for fuel subsidy in the fiscal year 2023 even as it reported that from January to April this year N3.09 trillion was recorded as deficit in the 2022 budget.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, reeled out these figures on Thursday at the Public Consultative Forum on the draft Federal Government 2023 – 2025 Medium Term Fiscal Framework and Fiscal Strategy, in Abuja.
Ahmed noted that the fiscal deficit in the 2022 fiscal year so far underscored the fiscal challenges the government had been contending with as the nation’s revenue to Gross Domestic Product (GDP) ratio remained one of the lowest globally.
The minister, who also hinted that the Nigerian National Petroleum Company Ltd., which had been funding fuel subsidy until June this would henceforth no longer do so, said continuing the fiscal measure would further strain the fiscal position of the government,
Describing the fuel subsidy regime as unsustainable, she explained that based on the current fiscal realities, the government had projected fiscal outcomes in the draft Federal Government 2023 – 2025 Medium Term Fiscal Framework and Fiscal Strategy under two scenarios based on the underlying budget parameters/assumptions.
Ahmed said that under the first scenario, the subsidy on PMS was estimated at N6.72 trillion for the full year 2023, adding that “it will remain and be fully provided for by the NNPC on behalf of the federation.”
According to her, under the second scenario “petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.
“Both scenarios have implications for net accretion to the Federation Account and projected deficit levels.
“There will be tighter enforcement of the performance management framework for Government Owned Enterprises (GOEs) that will significantly increase operating surplus/dividend remittances in 2023”, the minister added.
Ahmed, however, cautioned that both scenarios had implications for net accretion to the Federation Account and projected deficit levels.
To enhance the efficiency of the fiscal regime, the minister disclosed that there would be tighter enforcement of the performance management framework for Government Owned Enterprises (GOEs) in order to boost their operating surplus/dividend remittances in 2023.
Speaking at the forum, the Director General of the Debt Management Office (DMO), Patience Oniha, clarified why the government continued to borrow, saying that without this, it will be practically difficult for government to finance the yearly budgets.
The DMO boss stressed that the benefits of the borrowings cannot be over-emphasized based on the capital projects the borrowed funds were being used to finance, adding that “Nigerian public should be more concerned about raising the government’s revenues as growing the revenues remains the best solution to reducing borrowing by the government.”
