In a bid to address the budget shortfall envisaged for the forthcoming quarter, the Ministry of Finance, Budget and National Planning recently got approval for the 2022-2024 Medium Term Expenditure Framework and the Fiscal Strategy Paper, MTEF & FSP.
MTEF & FSP document approved by the Federal Executive Counciil, FEC,.contains detailed sketches on Government’s intentions regarding budget financing, projections, revenue generation, borrowings and expenditures, among other complementary actions.
A presentation by the Minister of Finance, Budget and National Planning, Zainab Ahmed, while convincing FEC on accepting the proposals, shows that Nigeria would have to collect foreign and domestic loans to finance the budget shortage.
Elaborating, Mrs Ahmed noted that Government would finance the deficit by new foreign and domestic borrowings to the tune of N4.89tr.
In addition, she said that the privatisation proceeds of N90.73bn, which is another source of funds, and the drawdowns from existing project tied loans of N635bn, would contribute to the budget fundings.
Budget Shortfall for 2021-2022
Overall, Mrs Zainab Ahmed revealed that the budget shortfall projected for 2022 is N5.62tr, up from N5.60tr in 2021.
According to her, this targeted figure represents only 3.05 per cent of the estimated GDP, which is slightly above the 3% threshold specified in the Fiscal Responsibility Act.
Earlier, the Minister disclosed that her ministry presented a memo to FEC containing 2022 revenue projections of N6.54tr and N2.62tr, of which the aim is to accumulate in the Federation Account.
Zainab Ahmed noted that the country expects N6.54tr and N2.62tr to accrue to the Federation account on Value Added Tax, VAT.
She said there would be net oil and gas revenue available for the Federation Account, “FAAC for distribution will be 6.15tr in 2022.”
However, she stated that her ministry had estimated some projections, an addition in 2023 to the sum of N9.15tr.
“The total expenditure that we are expecting we have projected and approved by Council is an aggregate expenditure of N13.98tr. This means that this budget is just 3% higher than the 2021 budget in terms of the size of expenditure.” She said.
The only relief from all said is where the Minister assured that the nation’s economy has recovered from a negative growth of minus 1.8% in 2020 to 2.5%.
“What is interesting is that the non-oil Gross Domestic Product, GDP, continues to grow at N169.69tr.”