The Federal Government of Nigeria recorded a budget deficit of N5.33 trillion between January and August 2022 despite Nigeria’s limited budgetary capacity.
Out of the N11.55tn pro rata estimated spending for the period, the government spent N9.56tn from January to August 2022.
N3.52 trillion of the N9.56 trillion spent in eight months went toward debt servicing, while N2.89 trillion went toward staff expenditures and pensions. N17.32 trillion is the expected total spending for the entire year 2022.
Dr. Zainab Ahmed, Minister of Finance, Budget, and National Planning, stated that as of August 2022, the Federal Government’s retained income was N4.23 trillion, or 64% of the pro rata objective of N6.65 trillion, during the ministerial presentation of the 2023 budget on Wednesday in Abuja.
She revealed that in 2022, the Federal Government’s share of oil income was N395.06 billion, marking a performance of 27.1%, while non-oil tax collections was N1,549.91 trillion, showing performance of 102.9%.
Ahmed also said that this year’s corporate income tax and value-added tax revenues were N826.27 billion and N210.36 billion, respectively, exceeding their respective goals by 136.3 per cent and 99.6 per cent, respectively.
Customs’ revenues, which include import and excise taxes, fees, and special levies for the federation account, fell short of the goal by N102.51 billion (17 per cent).
“The Customs introduced that thing and it has created a lot of revenue setbacks for the government. The government should look at it seriously and reduce it and cancel the VIN. It is illegal and should be cancelled,” the founder of the National Council of Managing Directors of Licensed Customs Agents, Mr Lucky Amiwero, told The Punch recently.
According to Ahmed, the key parameters and other macroeconomic projections driving the medium-term revenue and expenditure framework had been revised in line with the emergent realities, including the GDP growth (from 4.20 to 3.55 per cent in the 2022 forecast).
For the 2023 budget, she said investment, especially from foreign sources, was expected to be hit by interest rate hikes in advanced economies, foreign exchange management concerns in Nigeria and other domestic challenges, including insecurity.
“Overall budget deficit is N10.78tn for 2023. This represents 4.78% of GDP,” Ahmed said, noting that the budget deficit would be financed mainly by borrowings from domestic sources (N7.04tn); foreign sources (N1.76tn); multilateral /bi-lateral loan drawdowns (N1.77bn), and privatisation proceeds (N206.18bn).
In order to increase and diversify Nigeria’s income base, the Federal Government announced the Strategic Revenue Growth Initiative in 2020. But since then, revenues have not fared as well, and the country’s budgetary outlook has been harmed by debt repayment.
Ben Akabueze, the director general of the Budget Office of the Federation, said that the government has greatly improved the use of technology in the budgeting process, including the service-wide adoption of the GIFMIS Budget Preparation System.
