The Nigerian Government is again set to borrow over N11 trillion and sell national assets to finance the budget deficit in 2023,arguing that the government’s budget deficit is expected to exceed N12.42 trillion if it should keep petroleum subsidy for the entire 2023 fiscal cycle.
Penpushing reports that, Minister of Finance and National Planning, Zainab Ahmed, made this known on Monday while appearing before the House of Representatives Committee on Finance to defend the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The Minister explained two scenarios of the budget deficit to the committee, adding that the first option involves retaining the petroleum subsidy for the entire 2023 fiscal year, and the deficit is projected to be N12.41 trillion in 2023, up from N7.35 trillion budgeted in 2022.
Penpushing further reports that, Ahmed said this represents 196 per cent of total revenue or 5.50 per cent of the estimated GDP, explaining that, in this option, the government would spend N6.72 trillion on subsidy.
The Minister said the second option involves keeping subsidy till June 2023 and that this scenario will take the deficit to N11.30 trillion, which is 5.01 per cent of the estimated GDP, stressing that, in this option, PMS subsidy is projected to gulp N3.3 trillion.
Penpushing also reports that, Ahmed pointed out that the first option is not likely to be achievable based on the current trend while the second option would require tighter enforcement of the performance management framework for government-owned enterprises that would significantly increase operating surplus in 2023.
The Minister said projected deficit under the second option, is expected to be financed through new borrowings from local and international sources, adding that this will include a total of N9.32 trillion in new borrowings, comprising N7.4 trillion from domestic sources and N1.8 trillion from foreign sources. ]
Penpushing reports that, she said, the government is expected to generate N206.1 billion from privatisation proceeds and N1.7 trillion in multilateral project-tied loans, explaining that the two proposals have budget deficits far above the stipulated threshold in the Fiscal Responsibility Act.
The Minister said crude oil production challenges and PMS subsidy deduction by NNPC Limited constitute a significant threat to the achievement of our targets, as seen in the 2022 performance up to April.
Penpushing further reports that, Ahmed noted that the draft MTEF/FSP was prepared against the backdrop of continued global challenges occasioned by lingering coronavirus pandemic effects, as well as higher food and fuel prices due to the Russia/Ukraine war
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