*Finance Minister declares; cites global economy, dwindling revenue as reason
*As FG unveils 19.76trn budget expenditures for 2023 fiscal year
*Says budget deficit for 2023 fiscal year may run between N11.30trn, N12.41trn
*That FG earmarks N3.36trn fuel subsidy midyear, N6.72trn full 2023 fiscal year
By Aaron Ossai and Disun Amosun
Amidst harsh global economy and dwindling revenue generation by the Federal Government, the Minister of Finance, Budget and National Planning, Zainab Ahmed has declared that the Federal Government may not be able to make provisions for treasury funded capital projects in 2023 fiscal year.
She also disclosed that the government at the centre is proposing the sum of N19.76trillion budgetary expenditure for the 2023 fiscal year as against the sum of N17.13 trillion approved for the 2022 fiscal year.
Ahmed who painted gloomy picture of the country’s revenue generation while presenting the 2023 to 2025 Medium Term Expenditure Framework and Fiscal Strategic Paper, MTEF/FSP disclosed that the budget deficit for the 2023 fiscal year may run between N11.30 trillion and N12.41 trillion.
She said that the rise or fall in the budget deficit depends on the choice that will be made by the Federal Government on the issue of subsidy payment on Premium Motor Spirit, PMS also known as petrol.
The Minister who appeared before the House of Representatives Committee on Finance said crude oil production challenges and PMS subsidy deductions by the NNPC constitute significant threat to the achievement of the nation’s revenue growth targets adding that bold, decisive and urgent action is urgently required to address revenue under performance and expenditure efficiency at national and sub national levels.
In an overview of government revenue for 2023, she disclosed that from a projected figure of N6.34 trillion, out of which only N373.17 billion is expected from oil related revenue, the balance of N5.97 will have to come from non-oil sources.
On the key assumption on which the 2023 budget will be based, the Minister said oil benchmark for 2023 is estimated at 70 dollars per barrel, with an oil production benchmark of 1.69 million litres per day and an exchange rate of N435.02 to the dollar, while inflation is expected to grow at 17.16 percent.
She said further that GDP is expected to grow at 3.75 percent, while an upward pressure on prices is expected to be driven by the current and lag effect of the global price surge due to the Russia-Ukraine war, domestic insecurity, rising costs of imports, exchange rate depreciation as well as other supply side constraints.
Speaking further, the Minister said that growth in nominal consumption has been adjusted in line with revised estimates based on changes in the components of GDP and historical performances, stressing that medium term nominal consumption is projected at N121.93 trillion in 2023.
She said investments, especially from foreign sources, are expected to be dragged down by interest rate hikes in advanced economies, foreign exchange management concerns and other domestic challenges including insecurity.
Furthermore, the Minister also said that the key parameters as well as other macroeconomic projections driving the medium-term revenue and expenditure framework have been revised in line with the emergent realities.
“Oil production in April was 1.3 million barrels per day and by July it was 1.4 million. We do hope that the increase will be very significant because it’s costing us not just N3.2 billion in terms of security cost, but the revenue we have earned.
“In the MTEF for 2023 to 2025, we had removed the federation spending on pipeline security, assuming that with the transition of NNPC to NNPC limited, they will be carrying that cost directly, not the federation.
“The Petroleum Industry Act has given the NNPC some independence from the federation. And also as a registered company now under CAMA, they have to perform in line with the laws of the Company and Allied Matters Act.
“On production, we are projecting 1.69 million barrels per day based on the projection of NNPC. They are projecting that all the measures taken now are going to result in increased production and we hope it works out. If it doesn’t, the deficit situation we found ourselves in will even be worse”, she stated.
On the issue of the Morocco/Nigeria gas pipeline, she said the Federal Executive Council only recently approved funding for the feasibility study, which means that it’s still at the feasibility study phase.
While saying that the NNPC will be able to provide the needed details about the project, the Minister said that the government has already removed the project from government funding.
In his remarks, the Chairman of the House Committee on Finance, Rep. James Abiodun Faleke said the current financial situation in the country requires that all revenue sources be explored as the government was short of revenue.
Faleke said it was obvious that when there is no revenue, every aspect of the country suffers and asked all agencies appearing before the Committee to provide the Committee the correct position of their revenue.
He warned that no agency of government will be allowed to play with the revenue of the country.