December 8, 2023

  • Bitcoin(BTC)$24,383.00-1.66%
  • Ethereum(ETH)$1,657.83-2.53%
  • Tether(USDT)$1.000.18%
  • BNB(BNB)$310.23-1.26%
  • USD Coin(USDC)$1.000.10%
  • XRP(XRP)$0.39-0.81%
  • Binance USD(BUSD)$1.000.05%
  • Cardano(ADA)$0.39-2.73%
  • Dogecoin(DOGE)$0.09-2.67%
  • Polygon(MATIC)$1.38-6.66%

FG To Borrow Over N11 Trillion To Finance 2023 Budget


CEM REPORT | The Federal Government will have to borrow over N11 trillion to finance the deficit in the 2023 budget.

The Minister of Finance and National Planning, Zainab Ahmed, said the deficit will go higher depending on the decision of the president as regards petroleum subsidy.

She disclosed this while defending the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) before the House of Representatives Committee on Finance.


Explaining, the minister said the deficit total is tied to two scenarios.

She stated the first is retaining the petroleum subsidy for the entire 2023 fiscal year which will increase the deficit to a projected N12.41 trillion in 2023 adding that the government would spend N6.72 trillion on subsidy.

The deficit is up from N7.35 trillion budgeted in 2022, representing 196 per cent of total revenue or 5.50 per cent of the estimated GDP.

The second option involves keeping subsidy till June 2023 which will take the deficit to N11.30 trillion, representing 5.01 percent of the estimated GDP. In this option, PMS subsidy is projected to gulp N3.3 trillion.

She noted that the first option is not likely to be achievable based on the current trend while the second option would require tighter enforcement of the performance management framework for government-owned enterprises that would significantly increase operating surplus in 2023.

She further explained that the projected deficit under the second option is expected to be financed through new borrowings from local and international sources.

This includes a total of N9.32 trillion in new borrowings, comprising N7.4 trillion from domestic sources and N1.8 trillion from foreign sources. The government is expected to generate N206.1 billion from privatisation proceeds and N1.7 trillion in multilateral project-tied loans.

Additionalgovernment is projecting N19.76 trillion as total expenditure under option two, with projected oil daily production fixed at 1.69 million barrels per day at $70 per barrel. The exchange rate has been fixed at N435.57 to a dollar and inflation at 17.16 per cent.

Ahmed stated that crude oil production challenges and PMS subsidy deduction by NNPC Limited constitute a significant threat to the achievement of targets, as seen in the 2022 performance up to April.

She noted that the draft MTEF/FSP was prepared against the backdrop of continued global challenges occasioned by lingering COVID-19 pandemic effects, as well as higher food and fuel prices due to the Russia/Ukraine war.

The two proposals have budget deficits far above the stipulated threshold in the Fiscal Responsibility Act.

According to the existing Act, the deficit must not exceed 3 per cent of the GDP. However, the law makes provision for the President to cross the threshold with the approval of the National Assembly.

Section 12 (1 and 2) of the Fiscal Responsibility Act reads, “The estimate of:

1). Aggregate expenditure and the aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three per cent of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the National Assembly for each financial year.

2). Aggregate expenditure for a financial year may exceed the ceiling imposed by the provisions of subsection (1) of this section if in the opinion of the President there is a clear and present threat to national security or sovereignty of the Federal Republic of Nigeria.

Share this

Leave a Comment

glo advert