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MTEF: Nigeria may not budget for capital projects 2023 –Minister

Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning

*Zainab Ahmed, Minister for Finance, Budget and National Planning, says the crude oil production challenges and petrol subsidy deductions by NNPC Limited constitute significant threats to the West African country’s revenue growth targets

Isola Moses | ConsumerConnect

The Federal Government has hinted that it may not be able to make provision for treasury-funded capital projects in 2023.

Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning, said this Monday, August 29, 2022, noting the budget deficit for the 2023 fiscal year may run between N11.30trillion and N12.41trillion, depending on the choice the government makes on the issue of subsidy payment on the Premium Motor Spirit (PMS), otherwise known as petrol.

ConsumerConnect gathered Mrs. Ahmed, who disclosed this development Monday while presenting the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper before the House of Representatives Committee on Finance, in the National Assembly ( NASS), Abuja, FCT, put the aggregate expenditure of the government for 2023 at N19.76 trillion.

The Minister stated the crude oil production challenges and PMS subsidy deductions by the NNPC constitute significant threats to the achievement of the nation’s revenue growth targets, report said.

Possible scenarios in 2023, by Ahmed

The Minister urged an urgent bold, decisive and urgent action  to address revenue underperformance and expenditure efficiency at the national and sub-national levels.

Ahmed also said: “In this scenario, the budget deficit is projected to be N11.30 trillion in 2023, up from N7.35 trillion in 2022.

“This represents 5.01 percent of the estimated GDP, above the 3 percent threshold stipulated in the Fiscal Responsibility Act, 2007.”

On scenario 1, which she stated involves funding subsidy from January to December, the Minister said, “given the severely constrained fiscal space, budget deficit is projected to be N12.41 trillion in 2023, up from N7.35 trillion budgeted in 2022, representing 196 percent of total FGN revenue or 5.50 percent of the estimated Gross Domestic Product (GDP).

“This is significantly above the 3 percent threshold stipulated in the Fiscal Responsibility Act 2007 and there will be no provision for treasury funded MDA’s capital projects in 2023.”

Highlighting the Federal Government’s revenue outlook, Ahmed as well gave two scenarios.  Under the first scenario, the Federal Government’s revenue for 2023 may stand N6.34 trillion, out of which only N373.17 billion is expected from oil-related revenue while the balance of N5.97 trillion will come from non-oil sources.

In the second scenario two, the Minister said: “In addition to subsidy reform, this scenario assume an aggregate implementation of cost to income limit of Government-Owned Companies.

“With these, the 2023 FGN revenue is projected at N8.46 trillion out of which N.99 trillion or 23 percent is projected to come from oil revenue sources.”

In regard to the key assumption forming the basis for the 2023 budget, Mrs. Ahmed disclosed the oil benchmark for next year 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.

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