Reactions have continued to trail the proposed N20.51 trillion 2023 national budget with an oil benchmark fixed at $70 per barrel.
The Chief Executive Officer(CEO), Centre for the
Promotion of Private Enterprise (CPPE), Dr Muda Yusuf in a chat with Daily Post on Friday said the budget has amplified a troubling fiscal outlook for Nigeria economy.
Muda disclosed that the Central Bank of Nigeria(CBN) may likely finance the coming year’s fiscal deficit given the country’s dwindling revenue performance trajectory.
Yusuf who was also the former Director General Lagos Chamber of Commerce and Industry (LCCI) further revealed that Nigeria’s debt profile may hit N70trillion by the end of 2023 if caution is not taken.
He suggested that the government should focus on returns on investment from its assets especially within the maritime, oil and gas enterprises.
“The 2023 federal government budget has further amplified the troubling fiscal outlook for the economy. Expenditure continues to accelerate amid consistent weak revenue performance.
“We have a budget of 20.51 trillion naira and revenue projection of 9.73 trillion naira. This is a deficit of 10.78 trillion. In all probability, the deficit will be much bigger by year end because of the track record of revenue under performance over the last couple of years.
“We are also likely to see an acceleration of CBN financing of fiscal deficit given the revenue performance trajectory.The public debt stock is growing and currently at 42 trillion naira.
“With additional new borrowing of 8.8 trillion naira, the debt profile will be inching close to 50 trillion naira by May next year. If we take into account the borrowing from the CBN [ways and means], which is currently about 20 trillion naira, we will have a total debt of N70 trillion naira by the end of 2023. This should be a cause for concern.
“A number of issues need to be addressed to achieve our fiscal sustainability aspiration.Government owned enterprises managing huge economic assets need to justify the value of assets at their disposal. Returns on investment on those assets have been consistently sub optimal for many years. These include government enterprises in maritime, and oil and gas, for example. It is instructive that some reforms are ongoing at the NNPC.
“Oil revenue performance should be much better given the prevailing global oil price. Lapses in the petroleum upstream ecosystem need to be urgently addressed. This includes the impunity of crude oil theft and vandalism of oil facilities”, he disclosed.
The foreign exchange policy regime is adversely impacting the business environment and needs to be urgently addressed. Weak private sector performance would naturally affect non oil tax revenues.
“There is a need for budget reforms. The budgetary appropriations must reflect urgent national economic priorities. There are also concerns about value for money and other forms of fiscal leakages. The Auditor General of the federation had severally raised these concerns.”
He made a case for drastic budget reforms whereby budgetary allocation must reflect urgent national economic priorities.
According to him, “We agree with the President that funding of tertiary education cannot be adequately and sustainably supported exclusively from the government budget. New funding models need to be urgently explored for adequacy and sustainable funding. Current budgetary provisions need to be augmented from new innovative funding windows.”
He added that the government can’t continue to be sole financier of tertiary education, rather new funding models should be explored.
“The same is true for road infrastructure financing. The road fund bill needs to be revisited to ensure sustainable funding of road infrastructure across the country. Budget funding for roads cannot guarantee quality road infrastructure for a country over 200 million people.
“We note the reference by Mr President to Public Private Partnership(PPP) options for infrastructure financing. However, the macroeconomic and regulatory environment needs to improve to inspire confidence of investors in infrastructure within the PPP framework. Current macroeconomic and foreign exchange policy regimes are major disincentives to investors in infrastructure, especially the foreign investors. We need the inflow of such foreign capital to complement government funding in infrastructure”, Muda explained.
He said the incoming government would need to make tough policy choices to reset Nigeria’s economy.
“We note that this budget is a budget of Transition. However, the incoming administration would have to grapple with profound fiscal headwinds given the ominous fiscal outlook for 2023. As the campaigns progress, it is important for politicians to manage expectations. Tough policy choices will have to be made to reset the economy”, he stated.