The Federal Executive Council, FEC, has approved the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) as required by the Fiscal Responsibility Act, projecting revenue generation of N6.54 trillion and N2.62 trillion to accrue to the Federation Account and VAT.
The council also authorized the funding of the N5.26 trillion budget deficit through borrowings.
The Minister of Finance, Budget, and National Planning, Zainab Ahmed, stated this while briefing State House Correspondents, at the end of the meeting chaired by President Muhammadu Buhari, at the Presidential Villa Abuja.
She added that this revenue is projected to increase in 2023 to 9.15 trillion.
Ahmed explained that the MTF FSP describes the federal government’s socio-economic and developmental objectives and priorities for the reporting period of 2022 to 2024 as well as the fiscal strategies to be put in place, and policies to achieve in the priorities.
The minister further explained that the report to the council highlighted the key drivers of the government’s revenue and the spending plans.
“The goal for us is to improve the nation’s macroeconomic situation or reposition the economy on the path of inclusive diversified as well as sustainable. The MTF FSP consists of medium-term macroeconomic projections, fiscal targets, and estimates of revenue and expenditure including the government’s financial obligations.
“We have also presented to the federal government the projected revenues for 2022 to 2024.
Specifically for 2022, “the revenue that we expect is 6.54 trillion and 2.62 trillion to accrue to the Federation account on VAT respectively. And then there will be a net oil and gas revenue available for the Federation account FAAC for distribution will be 6.15 1 trillion in 2022.
Also Read: Senate passes N982 billion Supplementary Budget for 2021
“This revenue is projected to increase in 2023 to 9.15 trillion. The total expenditure that we are expecting we have projected and approved by Council is an aggregate expenditure of 13.98 trillion Naira. This includes 1.1 trillion Naira of government-owned enterprises expenditure as well as grants and donor funds donor-funded projects in the sum of 62.24 billion.
“This means that this budget is just 3% higher than the 2021 budget in terms of the size of expenditure.
“We also reported to council the budget deficit and the financing items for the expenditure. The budget deficit that is projected for 2022 is 5.62 trillion, up from 5.60 trillion in 2021. This amount represents 3.05% of the estimated GDP, which is slightly above the 3% threshold that is specified in the fiscal responsibility, Act.
“The FRA empowers Mr. President to exceed the threshold in his opinion, the nation faces national security threats. And it is our opinion on fact agreed that we can exceed.
“The deficit is going to be financed by new foreign borrowing and domestic borrowing, both domestic and foreign in the sum of 4.89 trillion on privatisation proceeds of 90.73 billion and drawdowns from existing project tied loans of 635 billion.
“I just want to state that the project had a debt to revenue ratio in the report is 43%. Which, of course, we know Nigerians all have concerns about the actual debt to revenue ratio into in 2019 was 58%. So, this is an improvement over the preceding 2019. In 2020, the ratio was up to 85%. So 2022 is a significant improvement on 22 inches. I like to stop here at this time.”
Ahmed said she also provided to the council, a macroeconomic background, which affirmed that the Nigerian economy has recovered from a negative growth of minus 1.8% in 2020 to 2.5%.
She added: “Also, the inflation has moderated from a 19 month high to two months high.
It’s now moderated for two months now, which is coming down to 17.93%. And our foreign reserves stand at 34.2 billion at the end of May, which is 640 million declined from the previous month.
“The key macro assumptions that were presented and council approved is that there’ll be a crude oil benchmark price of $57 per barrel of crude oil for 2022, a crude oil production of 1.88 million barrels per day, and our exchange rate of N410 or N415 to one US dollar, an inflation rate of 10% in 2022, and a nominal GDP of 149.369 trillion.
“What is interesting is that the non-oil GDP continues to grow at N169.69 trillion compared to all GDP of N14.8 trillion included in the nominal GDP. I beg your pardon, nominal consumption is 130,49.36 billion.”
Edited by Tunde Orebiyi
