Govt To Borrow N5.62trn For 2022 Budget Deficit

0 118

The federal government has submitted a proposal to borrow N5.62 trillion to finance the budget deficit in the 2022 budget.

This is just as the government disclosed that it would cut down on capital expenditure in 2022 by N259.315 billion.

The minister for finance, budget, and national planning, Zainab Ahmad, while presenting the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) before the House Committee on Finance, stated that the reduction became necessary given economic volatility occasioned by unstable global oil market as well as the effects of the COVID-19 pandemic.

“On capital expenditure, the sum of N1,759,804,022,579, as opposed to the N2,019,119,204,546, will be available to Ministries, Departments and Agencies of government in 2022,” she said.

The minister told legislators that the naira is being pegged at N410 to $1, as that the projection is likely to come down in favour of the naira in 2023.

Explaining the deficit, the minister said: “The budget deficit that is projected for 2022 is N5.62 trillion, up from N5.60 trillion in 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.

“This amount represents 3.05 percent of the estimated GDP, which is slightly above the three percent threshold that is spent as recommended in the Fiscal Responsibility Act.

On revenue projections, the minister, in the document, stated that based on the decision of the Federal Executive Council (FEC), the sum of N6.54 trillion is expected to be realised for the 2022 fiscal year, adding that it was projected to increase in 2023 to N9.15 trillion.

She disclosed further that net oil and gas revenue, which will be available for the Federation Account for distribution, will be N6.151 trillion in 2022.

The key macro-economic assumptions contained in the MTEF/FSP include a crude oil benchmark price of $57 per barrel for 2022, crude oil production of 1.88 million barrels per day, and a dollar exchange rate of N410.15 to one US dollar, an inflation rate of 13 percent in 2022, and a nominal GDP of 149.369 trillion.

On unemployment, the documents revealed that 82.9 million Nigerians are living in poverty.

According to the minister, the global economic growth is projected to be moderate to 4.9 percent in 2022, just as she warned that Nigeria continues to be exposed to risk aversion in the foreign exchange market and devaluation of the naira.

The MTEF/FSP are documents that describe the federal government’s socio-economic and developmental objectives and priorities for the reporting period of 2022 to 2024.

It also has the fiscal strategies to put in place policies to achieve government economic priorities, including highlights of the key drivers of government’s revenue and the spending plans.

Experts Ask FG To Fund N5trn Budget Deficit Through Capital Market(Opens in a new browser tab)

– The Guardian

Leave A Reply

Your email address will not be published.

%d bloggers like this: