2022 budget: FG okays funding of N5.62 trillion deficit with loans

• Approves N16b erosion control contracts

By Egena Sunday Ode

The Federal Executive Council (FEC)  on Wednesday authorized the funding of N5.26 trillion budget deficit through borrowing as it   approved the 2022 – 2024 Medium Term Expenditure Framework and the Fiscal Strategy Paper (MTEF & FSP).

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed who disclosed this to corespondents after the weekly meeting of the council presided over by President Muhammadu Buhari on Wednesday said her ministry presented a memo to FEC with a 2022 projected revenue of N6.54 trillion and  N2.62 trillion to accrue to the Federation Account and VAT, respectively.

She explained that the revenue is projected to increase in 2023 to N9.15 trillion, adding that the MTF FSP described the Federal Government’s socio economic and developmental objectives and priorities for the reporting period of 2022 to 2024 as well as the fiscal strategies to be put in place, and policies to achieving the priorities.

According to Ahmed, the report to council highlighted the key drivers of government’s revenue and the spending plans.

She declared: “The goal for us is to improve the nation’s macro economic situation or reposition the economy on the path of inclusive diversified as well as sustainable. The MTF FSP consists of medium term macro economic projections, fiscal targets and estimates of revenue and expenditure including government’s financial obligations.”

She further explained: “We have also presented to the federal government the projected revenues for the 2022 to 2024. Specifically for 2022.

“The revenue that we expect is 6.54 trillion and  2.62 trillion to accrue to the Federation account on VAT  respectively. And then there will be a net oil and gas revenue available for the Federation account account FAAC for distribution will be 6.15 1 trillion in 2022.

“This revenue is projected to increase in 2023 to 9.15 trillion. The total expenditure that we are expecting we have projected and approved by Council is an aggregate expenditure of 13.98 trillion Naira. This includes 1.1 trillion Naira of government owned enterprises expenditure as well as grants and donor funds donor funded projects in the sum of 62.24 billion.

“This means that this budget is just 3% higher than the 2021 budget in terms of the size of expenditure.

“We also reported to council the budget deficit and the financing items for the expenditure. The budget deficit that is projected for 2022 is 5.62 trillion, up from 5.60 trillion in 2021. This amount represents 3.05% of the estimated GDP, which is slightly above the 3% threshold that is specified in the fiscal responsibility, Act.

“The FRA empowers  Mr. president to exceed the threshold in his opinion, the nation faces national security threats. And it is our opinion on fact agreed that we can exceed.

“The deficit is going to be financed by new foreign borrowing and domestic borrowing, both domestic and foreign in the sum of 4.89 trillion on privatisation proceeds of 90.73 billion and drawdowns from existing project tied loans of 635 billion.

“I just want to state that the project had debt to revenue ratio in the report is 43%. Which, of course, we know Nigerians all have concerns about the actual debt to revenue ratio into in 2019 was 58%. So, this is an improvement over the preceding over 2019. In 2020, the ratio was up to 85%. So 2022 is a significant improvement on 22 inch. I like to stop here at this time.”

The minister said she provided to council, a macro economic background, which affirmed that

the Nigerian economy has recovered from a negative growth of minus 1.8% in 2020to 2.5%.

She added: “Also, the inflation has moderated from a 19 months high in two months high. It’s now moderated two months now, that is coming down to 17.93%. And our foreign reserves stands at 34.2 billion at the end of May, which is 640 million declined from the previous month.