FG to borrow 11Trillion naira to fund 2023 budget
Federal Government is proposing a little above eleven trillion Naira loan to finance the 2023 budget deficit, making Nigeria’s borrowings go above the stipulated threshold in the Fiscal Responsibility Act.
Minister of Finance, Budget and National Planning, Zainab Ahmed made this known when she appeared before a House of Representative Committee on Finance to defend the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
What did she tell the committee?
The finance minister said the government’s budget deficit is expected to exceed N12.42 trillion if the government keeps the petroleum subsidy for the entire 2023 fiscal year, adding that the 2023 budget is based on two options.
Zainab said the first option is that the deficit is projected to be N12.41 trillion in 2023, an increase from N7.35 trillion budgeted in 2022 which represents 196% of total revenue or 5.50% of the estimated GDP. This would put subsidy payment at N6.72 trillion.
On the second option, she said if the federal government keeps the subsidy payments till June 2023, the budget deficit would amount to N11.30 trillion, which is N5.01 trillion of the estimated GDP, putting subsidy payment at N3.3 trillion
What does this mean for the fiscal bill?
The minister revealed that the first option is not likely achievable based on the current trend, while the second option would require tighter enforcement. She also said borrowings would come from local and international sources, announcing a new borrowing of N9.32 trillion, comprising N7.4 trillion from domestic sources and 1.8 trillion from foreign sources, with an expected government revenue generation of N206.1 billion from privatization proceeds and N1.7 trillion in multilateral project-tied loans.
