- In 2022-2024 expenditure framework
- Admits fuel subsidy bad news for the economy
BY COBHAM NSA – Pushing aside current worries over the country’s rising debts and inadequate revenue profiles, the Federal Government is projecting an expenditure of N13.981 trillion for the 2022 budget with the figures climbing to N15.498 trillion and N16.777 trillion in 2023 and 2024 respectively.
This is as the government self-confessed that the fuel subsidy administration, with about N150 billion expenditure in a particular month, remains an encumbrance for economic growth and must therefore be eliminated urgently in the overall interest of the country.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who dropped the hints while unveiling the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja on Thursday, said the projections were anchored on activities around the global oil market, especially with the rising prices of crude.
Mrs Ahmed explained that given the various considerations, the MTEF has a benchmark of $57 per barrel in 2022 and 2023, with the figure likely to dip in 2024 to about $55 per barrel.
The Minister stated that the crude oil benchmarks were “premised on the averages of leading forecasting institutions, factors affecting market fundamentals, global economic recovery, plans by governments and market sentiments.”
Also citing the World Bank projections that crude oil prices will progressively upswing from an average of $60 per barrel in 2022 to about $61 per barrel in 2023 and 61.9 per barrel in 2024, the Minister noted that oil prices have lately hovered around $77 per barrel.
Similarly, with the Gross Domestic Product (GDP) growth rate predicted to grow from 2.5 per cent projected for this year to about 4.20 per cent in 2022, the MTEF/FSP document however indicated that the GDP progression rate would tumble to 2.3 per cent in 2023 before hopefully recording another climb to about 3.3 per cent the following year.
For the Minister, the lessening expectations around the GDP projection for 2023 are directly related to the general elections that would be holding that year, with its likely adverse impact on economic activities.
According to her, weaker-than-expected economic performance is a threat to the federal government’s ambitious revenue growth targets as seen in the first five months of the 2021 fiscal year, adding that; “As of May, N1.49 trillion was realized out of the prorated sum of N2.16 trillion. This represents 69% performance.”
The Minister’s presentation also captured non-oil revenue as bring to the government coffers over N1.954 trillion between January and May 2021.
The figures presented by the Minister on the spending side indicated that between January and May 2021, about N4.86 trillion, which represents 92.7 per cent of the allocated budget, has been consumed so far.
Explaining that; “This excludes GOEs’ and project-tied debt expenditures”, the Minister added that; “Of the expenditure, N1.80 trillion was for debt service (37% of FGN expenditures); and N1.50 trillion for Personnel cost, including Pensions (31% of FGN revenues).”
“As of May, N973.13 billion had been released for capital expenditure”, the Minister said.
Giving a breakdown on the N2.78 trillion that was available for distribution among the three tiers of government from the Federation Account, the Minister stated that the larger chunk of N998.57 billion went to Federal Government; the States got N506.59 billion while the 774 Local Governments took home N390.48 billion.
From the VAT income, the shared funds indicated that Federal Government got N132.70 billion, with the State and Local government getting N442.33 billion and N309.63 billion respectively.