Federal Government seeks to borrow N11.3 trillion to finance the proposed 2023 budget of N19.76 trillion. The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, revealed this information while presenting the 2023 to 2025 Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FSP) to the House of Representatives’ Committee on Finance chaired by Honourable Abiodun Faleke.
The fiscal parameters for the year include oil production volume at 1.69mbpd, oil benchmark at $70 per barrel, exchange rate at N435.57/$, N8.501 trillion as total oil and gas revenue, N1.105 trillion as derivation, N7.396 trillion as total oil and gas revenue after derivation, deductions at N3.538 trillion, and other federally funded upstream projects pegged at N3.432 trillion.
The minister also presented two scenarios of budget parameters on fuel subsidy, estimated at N6.72 trillion for full year 2023 (business-as-usual scenario) as well as a possible provision of N3.36 trillion for mid-year 2023 (reform scenario).
Lawmakers expressed concerns over the significant increase in the fiscal deficit pegged at N11.30 trillion for 2023 compared to N7.35 trillion for 2022.
Regarding the Federal Government’s revenue for 2023 to 2025, the minister outlined two scenarios, projecting N6.34 trillion with a minimal percentage from oil-related sources and N8.46 trillion with an expected aggressive implementation of cost-to-income limits of Government-Owned Enterprises (GOEs).
In terms of expenditures, the minister highlighted that budget deficit is projected to be N12.41 trillion in 2023, significantly above the three percent threshold stipulated in the Fiscal Responsibility Act, 2007. The Federal Government’s 2023 aggregate expenditure is estimated at N19.76 trillion, including Government-Owned Enterprises (GOEs).
The minister responded to questions on the low revenue from the oil sector, acknowledging the need for a different approach due to declining production. She also mentioned the transition of the Nigerian National Petroleum Corporation (NNPC) to NNPC Limited, which would result in NNPC directly bearing certain costs, paying taxes and dividends, potentially leading to increased revenue for the government.