2023 Federal Government budget and matters arising

Aside the pomp and pageantry (a yearly ritual) that attended the signing into law of the Federal Government 2023 Budget, there is very little to cheer Nigerians who are conversant with the enormity of economic problems currently afflicting the country and consequently pessimistic of the budget’s positive impact on them. Their fear is not unfounded because, as the figures indicate, the 2023 federal budget appears least expected to positively impact the lives of the average Nigerian. The Nigerian economy is currently having serious fiscal sustainability challenges and the growing size of public spending tends to suggest that the federal authorities appear unaware that indeed, there is “fire on the mountain.” There are indeed lots of matters arising from the 2023 federal budget document.

The budget ritual often means many things to many people – a clear case of different strokes for different folks. The average Nigerians do not see how this significantly affect their lives, while for individuals and corporate organisations that have anything to do with government, it means a lot, in relation to their means of survival. For the 2023 budget, the process was just concluded on January 3, 2023 when President Muhammadu Buhari signed into law the Appropriation Bill from the National Assembly in the presence of the Minister of Finance as well as the President of the Senate, Ahmad Lawan and the Speaker of the House of Representatives, Olufemi Gbajabiamila, among other dignitaries. As usual, the annual ritual was full of splendour but largely of little consequence to the ordinary man in the street or in the rural communities who hardly feel the impact of this ritual in their daily lives.

First, the budget size of N21.83 trillion is the largest, in naira terms, in the life of the Buhari administration and indeed since the onset of democratic rule in 1999. The administration has been progressively jerking up the size of the budget over fourfold, from the average of about N4.5 trillion which prevailed under the Goodluck Jonathan administration to the current humongous figure of N21.83 trillion. This has been accompanied by unbridled foreign and domestic borrowing to the extent that the country now has a public debt crisis. Despite the presentation of a budget proposal of N20.51 trillion to the National Assembly late in 2022 by Mr. President, the National Assembly went ahead and increased the budget size by N1.32 trillion by the inclusion of new projects, in an era when a sense of austerity should have prevailed. Second, the approval of the Supplementary Budget for 2022 to be implemented up to March 2023 indicates that government appetite for unbridled spending has not been quenched and the country is being led on the path of fiscal crisis by the current Muhammadu Buhari administration. Third, it is surprising that year 2023 does not conform to the parameter estimates of the recently launched 2021-2025 National Development Plan. This is a major distortion given that the annual budgets are supposed to be in sync with the Plan in the realisation of long-term development goals for the Nigerian economy. This has to be corrected.

The spate of perennial budget deficit financing under the Muhammadu Buhari administration and throughout its tenure has become very worrisome. That of 2023 is unprecedented. The projected spending of N21.83 trillion is more than double the projected revenue of about N10.5 trillion. How is that sustainable? How is that implementable? How is that realistic? The resort has often been to increase in public borrowing. Perpetually increasing the public debt portfolio is suggestive of a regime that is seemingly bereft of new ideas to manage the country’s public finance. Why is there no clear focus on cutting the cost of governance? The Presidency, the Ministries, Departments and Agencies (MDAs) of government as well as the National Assembly are still on the “business as usual” mode and the size of the budget as well as public borrowing keeps increasing. This needs to stop. This newspaper as well as other stakeholders have been calling the attention of government to the need to cut the cost of governance. Contrarily, what is being seen is an unrestrained ballooning of government expenditures such that new borrowing becomes the norm and new taxes on the already overtaxed Nigerians are being churned out in successive Finance Acts, particularly those for 2021 and 2022. Though the country still has room for the raising of more revenue from taxation, given its low tax to GDP ratio relative to other African countries, the focus should be on the ultra-rich and those outside the tax net. But this has not been the case.

The removal of the fuel subsidy regime by June 2023, though it has its potential positive effects of reducing government expenditure, has serious inflationary implications which it is hoped, government has made provisions for in the poverty alleviation and social inclusion programmes embedded in the budget document. In some respects, it appears that the Buhari administration has dodged addressing the fuel subsidy removal issue and it has thus cleverly passed the buck to the next administration which is expected to be in office in June 2023. On record, it is thus obvious that Buhari has played “flip-flop” on the fuel subsidy issue and has not added any value whatever in the resolution of the issue except in the signing into law of the Petroleum Industry Act (PIA). In any case, Buhari never believed fuel subsidy existed in the first place. It is also of note that the projected size of the subsidy under the Buhari administration has been questioned by many stakeholders who assert that the estimation of daily fuel consumption of over 60 million litres per day is controversial. There are many questions than answers on this fuel subsidy imbroglio and the government has seemingly failed woefully in this regard.

It is noteworthy also that the provision for defence and security in the 2023 budget is the largest followed by that for education and health. However, it is ironic that there are serious crisis in these sectors particularly for defence and security which has been receiving huge allocations since the inception of this administration and yet the spate of insecurity has been worsening. Even at a time, the Excess Crude Account was depleted by a whopping US$1 billion at a go and not much difference has been made in this regard. Is the country at war with itself and does the administration not have a clue as to how the insecurity issue can be addressed aside from throwing money at it and likely fuelling corruption in that sector?

Largely, many of the assumptions of the 2023 budget appear questionable. Inflation is currently at over 21 per cent and yet a target of 17.16 is proposed for 2023 when it should be clear that a removal of fuel subsidy is most likely to be inflationary. The exchange rate target of N435 to US$1 appears unrealistic since currently the rate at the Investors and Exporters (I&E) window or the official market is current over N460 to US$1. How is the magic going to be performed? Is it by the merging of all the rates in the foreign exchange market or the launching of the Dangote refinery or what? People need to know this. For daily crude oil production, a provision of 1.69 million barrels implies that the budget is still making provision for the continuation of oil theft in 2023 given that the figure is still less than the country’s production quota from the Organisation of Petroleum Exporting Countries (OPEC). However, a benchmark price of $75 per barrel in estimating revenue from oil appears conservative since the current global price per barrel of crude oil hovers between $85 and $100. That could make up for the low estimate for crude oil production.

Overall, given the contents of the budget, the year 2023 may be a tough and challenging one more so when over N6.5 trillion will be used to service debts alone from a dwindling revenue source. It is gladdening, however, that as indicated in the statement by Femi Adesina, the President’s Special Adviser (Media & Publicity), “President Buhari said his decision to sign the 2023 Appropriation Bill into law, as passed by the National Assembly, was to enable its implementation commence without delay, considering the imminent transition process to another democratically elected government.” It is hoped that some or all of the identified anomalies or matters arising from the 2023 budget could be looked into in a possible supplementary budget by the present or even the incoming administration. Nigeria deserves better than it is currently being served.