Fakoyejo OlalekanThe Minister of finance, budget and national planning, Zainab Ahmed, says the Federal Government will borrow N9.32 trillion from domestic and foreign creditors to finance 2023 budget deficit.
She stated that the federal government will borrow N1.8 trillion from foreign creditors, while the remaining N7.4 trillion will be sourced from domestic creditors.
Although she explained further that the government will generate about N206.1 billion from privatisation proceeds, and obtain N1.7 trillion multilateral project-tied loans to support the funding of the deficit.
The minister disclosed this on Monday, during her defense of the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the House of Representatives Committee on Finance.
Ahmed said going into 2023, the federal government has two budget deficit options, explaining that a prolong subsidy payment from January to December next year will cost N6.72 trillion, with a budget deficit of N12.41 trillion, which surpasses the N7.35 trillion budgeted in 2022.
According to Ahmed, the deficit is above the threshold in the Fiscal Responsibility Act, as it represents 196 percent of total revenue or 5.50 percent of the estimated Gross Domestic Product (GDP).
Ahmed said the first option is near impossible due to the current trend in the oil market, but stated that the alternative is more realistic, which is a projected budget deficit of N11.30 trillion on the basis that about N3.3 trillion will be paid as subsidy between January to June 2023, after which subsidy will be removed. The deficit is N5.01 trillion of the estimated GDP.
While defending the reason the federal government is exceeding the deficit ceiling, considering the Fiscal Responsibility Act limits the deficit threshold to three percent, Ahmed said when the national security or Nigeria’s sovereignty is threatened, the President can go above the stipulated limit.
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