FG may not budget for capital projects in 2023, says Finance Minister

The Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed, has said that the Federal government may not be able to make provision for treasury-funded capital projects in 2023.

The minister also said that the budget deficit for the 2023 fiscal year may hover between N11.30 trillion to N12.41 trillion depending on the choice that will be made by the government on the issue of subsidy payment on premium motor spirit otherwise known as petrol.

The minister, who spoke while presenting the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper before the House of Representatives Committee on Finance, put the aggregate expenditure of the government for 2023 at N19.76 trillion.

She said crude oil production challenges and PMS subsidy deductions by the NNPC constitute significant threats to the achievement of the nation’s revenue growth targets, adding that bold, decisive and urgent action is urgently required to address revenue underperformance and expenditure efficiency at national and sub-national levels.

She said: “In this scenario, the budget deficit is projected to be N11.30 trillion in 2023, up from N7.35 trillion in 2022. This represents 5.01 percent of the estimated GDP, above the 3 percent threshold stipulated in the Fiscal Responsibility Act, 2007.

“In scenario 1 which she said involve funding subsidy from January to December, the Minister said “given the severely constrained fiscal space, budget deficit is projected to be N12.41 trillion in 2023, up from N7.35 trillion budgeted in 2022, representing 196 percent of total FGN revenue or 5.50 percent of the estimated GDP.

“This is significantly above the 3 percent threshold stipulated in the Fiscal Responsibility Act 2007 and there will be no provision for treasury funded MDA’s capital projects in 2023.”

Giving an overview of government revenue, she also gave two scenarios, saying under the first scenario, Federal Government revenue for 2023 may stand N6.34 trillion, out of which only N373.17 billion is expected from oil- related revenue while the balance of N5.97 will come from non-oil sources.
On the second scenario two, she said: “In addition to subsidy reform, this scenario assume an aggregate implementation of cost to income limit of Government Owned Companies. With these, the 2023 FGN revenue is projected at N8.46 trillion out of which N.99 trillion or 23 percent is projected to come from oil revenue sources.”

On the key assumption on which the 2023 budget will be based, the minister said oil benchmark for 2023 is estimated at 70 dollars per barrel with an oil production benchmark of 1.69 million litres per day and an exchange rate of N435.02 to the dollar while inflation is expected to grow at 17.16 percent.