The Federal Government of Nigeria plans to borrow N4.89 trillion from both domestic and foreign sources for the financing of 2022 budget deficits.
The FGN’s 2022 aggregate expenditure is estimated at N13.98 trillion. This provision is higher than the corresponding 2021 FGN aggregate expenditure estimate of N13.59 trillion by 3% (or about N393.81 billion).
The sums of N15.46 trillion and N16.77 trillion are projected to be spent by the FGN in 2023 and 2024 respectively.
The N5.62 trillion budget deficit projected for 2022 is also higher than the N5.60 trillion for 2021.
“The deficit is going to be financed by new foreign borrowing. And domestic borrowing, both domestic and foreign in the sum of N4.89 trillion, then privatisation proceeds of N90.73 billion and drawdowns from existing project titles of N635 billion,” said the minister for Finance, Budget and National Planning, Zainab Ahmad, while presenting 2022—2024 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper(FSP).
She said the “amount represents 3.05 per cent of the estimated GDP, which is slightly above the 3 per cent threshold that is spent recommended in the Fiscal Responsibility Act (FRA) 2007.”
The aggregate revenue available to fund the 2022 Budget is projected at N7.26 trillion (9% or N626.37 billion more than the 2021 Budget). Of this, N3.16 trillion or 49.1% is projected to come from oil-related sources while the balance is to be earned from non-oil sources, according to the MTEF
The provision for Signature Bonus is down to N280.86 billion from N677.01 billion projected in 2021.
With the retained revenues of the Government-Owned Enterprises (GOEs), excluding the NNPC and CBN, the aggregate FGN revenue is projected at N8.36 trillion.
According to the 2022—2024 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper(FSP) the 2022 expenditure estimate includes:
Statutory transfers of N613.36 billion, and non-debt recurrent expenditure of N6.21 trillion (including N350 billion for the recurrent component of the Special Intervention Programme).
A provision of N3.61 trillion was made for debt servicing and N292.71 billion for sinking fund.
A total of N4.79 trillion (inclusive of N750.04 for GOEs) is provided for personnel and pension costs, an increase of N534.40 billion over 2021. This is 57% of projected aggregate revenues for 2022.
The aggregate amount available for capital expenditures in the 2020 budget is N3.61 trillion, 17.3% less than the 2021 provision.
Only N1.76 trillion of the capital expenditure is available for Ministries, Departments and Agencies (MDAs), 12.8% less than the provision for MDAs in the 2021 Appropriation Act.
Key parameters for the 2022 expenditure framework are Oil Price Benchmark of $57.0 per barrel; oil production of 1.88 mbpd; exchange rate of N410.15 per US dollar; inflation of 13%; GDP growth rate of 4.2%.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.