FG’s fiscal deficit grows over 10 folds in eight years
Against drying revenues, the fiscal deficit of the Federal Government has jumped by close to 1000 per cent in the life of President Muhammadu Buhari administration.
The fiscal deficit – the difference between earned revenue and expenditure – is estimated to reach N10.78 trillion next year as contemplated in the 2023 Appropriation Bill. The figure would take the growth deficit to 947 per cent from 2016 when it stood at N1.027 trillion.
The 2016 budget, tagged: “budget of Change’, was the first yearly fiscal appropriation prepared and fully executed by the current administration.
The President has proposed total spending outlay of N20.52 trillion next year with N9.73 trillion to be funded with revenue while N10.78 trillion or 52.5 per cent would be financed with fresh borrowings, drawbacks from existing commitments by multilateral/bilateral partners as well as privatisation proceeds.
While privatisation proceeds have been a regular funding line item on the revenue sources, the actual performance has remained zero except in 2016 when N5.9 billion was realised from the source.
Estimated deficits have, historically, been surpassed by actual performance while revenue buckles behind projections. Already, some experts have dismissed next year’s appropriation bill as spurious.
The huge deficit estimation, the highest even contemplated by the country, comes on the heels of ballooning expenditures and almost stagnating revenues.
From 2016 till 2021, the last fully implemented budget, FG’s earned revenue grew by 72 per cent – from N3.855 trillion to N6.637 trillion. The country is some months behind the end of the current budget circle. But in the first four months, the government earned a total of N1.63 trillion while it spent N4.72 trillion, with N1.94 trillion going into debt service.
The government plans to spend N6.31 trillion or 65 per cent of the estimated revenue of next year on debt service while N5.35 trillion would go into capital expenditure.
Taking the country’s population as given by worldpopulationreview.com/(218.8 million), the government’s capital project spending per capita is N24, 541 for the whole of next year. More specifically, spending on every Nigerian education, power, road and other capital items next year is limited to N24, 541.
Commenting on this, yesterday, the Chairman of Edgefield Capital Management Limited, Gboyega Nasir Isiaka, said the lending of infrastructure spending was a far cry from what is required to stimulate growth and development.
Isiaka said: “We must match our economic development aspirations with infrastructure spending. The way to go about it is to reduce recurrent expenditure to free some money for CAPEX. Practically, we need to discipline our spending pattern and block the linkages in public revenue.”
David Adonri, an economist and investment banker, told The Guardian yesterday that the budget is not fit for purpose and would certainly be reviewed for amendment by the next national administration. He insisted that the extremely expansionary budget proposal is a mismatch with the current economic reality, which tends toward contraction.
