Budget of Fiscal Consolidation and Transition (3)

BY MUHAMMADU BUHARI

RECENT ACHIEVEMENTS

Over the last year, this Administration has implemented several priority projects. Our focus has been on the completion of key road and rail projects; the effective implementation of power sector projects; the provision of clean water; construction of irrigation infrastructure and dams across the country; and critical health projects such as upgrading Primary Health Care Centres across the six geopolitical zones.

31. We have also gone further on the implementation of several power generation, transmission, and distribution projects, as well as off-grid solutions, all aimed towards achieving the national goal of optimizing power supply by 2025.

32. In the determination to ramp up grid electricity supply to at least 7,000 megawatts by 2024, we have procured purpose-built critical power equipment under the Presidential Power Initiative with Siemens as we promised. These projects will have multiplier effects on the economy.

33. Under the Road Infrastructure Tax Credit Scheme, we are undertaking the construction and rehabilitation of about two thousand kilometres of roads and bridges, nationwide, to be financed by the grant of tax credits to investing private companies.

34. As I mentioned earlier, we have made appreciable progress in the rehabilitation and reconstruction of key road networks like the Lagos – Ibadan expressway, Abuja-Kaduna-Kano expressway and East-West Road in Niger Delta. Work has also reached completion stage on the Apapa – Oworonsoki expressway, Loko-Oweto Bridge and the Second Niger Bridge. We hope to commission these projects before the end of our tenure in 2023.

35. Furthermore, we have awarded several contracts to rehabilitate, reconstruct and construct major arterial roads to reduce the hardship to commuters and increase economic activity.

36. Regarding personnel costs, we have extended the coverage of the Integrated Payroll and Personnel Information System (IPPIS) to all MDAs to automate personnel records and the process by which salaries are paid and eliminate the incidence of ghost workers. The system is currently being reviewed to enhance its functionality and applicability to MDAs in the different sectors.

READ: Budget of Fiscal Consolidation and Transition (2)

37. Distinguished Senators and Honourable Members, although we have recorded more achievements over the last year, I will now proceed with an overview of the 2023 Budget proposal.

THEME AND PRIORITIES OF THE 2023 BUDGET

38. The 2023 Budget proposal is the eighth and final budget of this Administration. It reflects the serious challenges currently facing our country, key reforms necessary to address them, and imperatives to achieve higher, more inclusive, diversified and sustainable growth.

39. The expenditure policy of Government in 2023 is designed to achieve the strategic objectives of the National Development Plan 2021 to 2025, including macroeconomic stability; human development; food security; improved business environment; energy sufficiency; improving transport infrastructure; and promoting industrialization focusing on Small and Medium Scale Enterprises.

40. Against the backdrop of the challenging global and domestic economic environment, it is imperative that we strengthen our macroeconomic environment and address subsisting challenges as a country. The 2023 Appropriation therefore is a Budget of Fiscal Sustainability and Transition. Our principal objective in 2023 is to maintain fiscal viability and ensure smooth transition to the incoming Administration.

2023 BUDGET PARAMETERS AND FISCAL ASSUMPTIONS

41. Distinguished Members of the National Assembly, the 2023 to 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper sets out the parameters for the 2023 Budget as follows:

a. Oil price benchmark of 70 US Dollars per barrel;

b. Daily oil production estimate of 1.69 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day);

c. Exchange rate of 435.57 Naira per US Dollar; and

d. Projected GDP growth rate of 3.75 percent and 17.16 percent inflation rate.

2023 REVENUE ESTIMATES

42. Based on these fiscal assumptions and parameters, total federally-collectible revenue is estimated at 16.87 trillion Naira in 2023.

43. Total federally distributable revenue is estimated at 11.09 trillion Naira in 2023, while total revenue available to fund the 2023 Federal Budget is estimated at 9.73 trillion Naira. This includes the revenues of 63 Government-Owned Enterprises.

44. Oil revenue is projected at 1.92 trillion Naira, Non-oil taxes are estimated at 2.43 trillion Naira, FGN Independent revenues are projected to be 2.21 trillion Naira. Other revenues total 762 billion Naira, while the retained revenues of the GOEs amount to N2.42 trillion Naira.

READ: Budget of Fiscal Consolidation and Transition (1)

45. The 2023 Appropriation Bill aims to maintain the focus of MDAs on the revenue side of the budget and greater attention to internal revenue generation. Sustenance of revenue diversification strategy would further increase the non-oil revenue share of total revenues.

PLANNED 2023 EXPENDITURE

46. A total expenditure of 20.51 trillion Naira is proposed for the Federal Government in 2023. This includes 2.42 trillion Naira spending by Government-Owned Enterprises. The proposed 20.51 trillion Naira 2023 expenditure comprises:

a. Statutory Transfers of N744.11 billion;

b. Non-debt Recurrent Costs of N8.27 trillion;

c. Personnel Costs of N4.99 trillion;

d. Pensions, Gratuities and Retirees’ Benefits of N854.8 billion;

e. Overheads of N1.11 trillion;

f. Capital Expenditure of N5.35 trillion, including the capital component of Statutory Transfers;

g. Debt Service of N6.31 trillion; and

h. Sinking Fund of N247.73 billion to retire certain maturing bonds.

FISCAL BALANCE

47. We expect total fiscal operations of the Federal Government to result in a deficit of 10.78 trillion Naira. This represents 4.78 percent of estimated GDP, above the 3 percent threshold set by the Fiscal Responsibility Act 2007.

48. As envisaged by the law, we need to exceed this threshold considering the need to continue to tackle the existential security challenges facing the country.

49. We plan to finance the deficit mainly by new borrowings totalling 8.80 trillion Naira, 206.18 billion Naira from Privatization Proceeds and 1.77 trillion Naira drawdowns on bilateral/multilateral loans secured for specific development projects/programmes.

50. Over time, we have resorted to borrowing to finance our fiscal gaps. We have been using loans to finance critical development projects and programmes aimed at further improving our economic environment and enhance the delivery of public services to our people.

51. As you are aware, we have witnessed two economic recessions within the period of this Administration. A direct result of this is the significant decline in our revenue generating capacity.

52. In both cases, we had to spend our way out of recession, resulting in higher public debt and debt service. It is unlikely that our recovery from each of the two recessions would have been as fast without the sustained government expenditure funded by debt.

FINANCE BILL 2022

53. In line with our plan to accompany annual budgets with Finance Bills, partly to support the realization of fiscal projections, current tax and fiscal laws/regulations are being reviewed to produce a draft Finance Bill 2022.

54. It is our intention that once ongoing consultations are completed, the Finance Bill 2022 would be submitted to the National Assembly to be considered alongside the 2023 Appropriation Bill.

– 2023 Budget speech delivered by: His Excellency, President Muhammadu Buhari, President, Federal Republic of Nigeria at the Joint Session of the National Assembly, Abuja. Friday, 7TH October, 2022