EDITORIAL: The negative sides of N20.51trn 2023 budget

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President Muhammadu Buhari on October 7, 2022 presented a N20.51 trillion 2023 budget of Fiscal Consolidation and Transition to the National Assembly with a proposed Revenue of N9.73 trillion, resulting in N10. 78 trillion fiscal deficits.

Uba Group

The budget which has passed the second reading at the National Assembly comprises Statutory Transfers of N744.11 billion, Non-debt Recurrent Cost of N8.27 trillion, Personnel Cost of N4.99 trillion as well as Pension, Gratuities and Retirees’ Benefits of N854.8 billion.

It also has an Overhead Cost of N1.11 trillion, Capital Expenditure of N5.35 trillion, Debt Service of N6.31 trillion and a Sinking Fund of N247.73 billion to retire certain maturing bonds.

The N6.31 trillion debt service which includes interest payment of N1.2 trillion for Ways and Means is 30.8 per cent of the total expenditure as well as 71.2 per cent higher than the 2022 estimate.

In the proposed revenue, 20 per cent is expected to come from oil-related sources while 80 per cent is projected to come from non-oil sources.

Among other allocations to various sectors, health receives N1.58 trillion which is 8 percent of the budget with N47.65 billion provided for the Basic Healthcare Provision Fund.

A total of N2.05 trillion is proposed for education with the Universal Basic Education Commission and Tertiary Education Revitalisation and Salary Enhancement provided with N95.30 billion and N470 billion respectively.

Infrastructure has N998.93 billion allocated to it in the budget and this provision includes Works and Housing, Power, Transport, Water Resources and Aviation.

It is of concern that the N20.51 trillion 2023 budget proposal has not been well received by economic experts and other stakeholders as well.

Many are panicking that the implementation of the budget will be difficult, considering the prevailing economic realities.

Many economic experts are of the opinion that with dwindling revenue, oil market volatility, high imports occasioned by a weakened naira and high food prices, implementing the budget will be a herculean task.

“The over 2.5 million people displaced by flood; the over 500 deaths recorded so far and businesses destroyed wouldn’t have occurred if there were enough investments in infrastructure.”

Other stakeholders who picked holes in the estimate said part of the solution to Nigeria’s economic problems was to reduce the high cost of governance.

We decry the borrowing plans of the Federal Government to fund the budget while the allocations made to some critical sectors are very poor.

We are worried that the estimate may not be workable because of the parameters used for projected revenues of the Federal Government.

How can the Federal Government borrow almost half of the required money to fund our budget? What is the cost of servicing the loans?

We are worried that the costs of governance in the budget and the previous ones are too high in the face of food and security challenges facing the country.

The provisions for overseas travels, feeding, overheads as well as debt servicing at N6.31 trillion (30%) are unacceptable when the allocations to health and education are less than five per cent.

The N470 billion earmarked for tertiary education out of N2.05 trillion appropriated to education is disappointing.

“CBN"

The figure shows that the Federal Government has not fully committed to advancing tertiary education in the country.

The funds appropriated for the education sector, particularly tertiary education, cannot bring the desired effective results.

The only way to grow the sector is by adopting the UN Educational, Scientific and Cultural Organisation’s recommendation of investing between five and 10% of the national budget in education.

Less investment in education means that there will be more infrastructural decay in our tertiary education centres, further lowering the quality of education in the country.

Also, the borrowing rate of the government and the revenue projection of N9.73 trillion are unrealistic, especially in the face of N6.3 trillion projected for debt services.

It is difficult to reconcile the call made by President Buhari at the United Nations General Assembly for debt forgiveness for developing countries with plans to borrow over N10 trillion.

It is worrisome that the budget seems to be built around servicing debts.

We equally note the appalling allocation to the health sector and say it as not befitting because it is below the African Union benchmark.

A total of N1.58 trillion or eight per cent of the proposed budget has been allocated to health while the government plans to spend N756 billion (4%) on social development and poverty reduction programmes.

The sector’s 8% allocation is far below the commitment made by African leaders under the Abuja Declaration to allocate at least 15% of their annual budgets to the health sector.

On infrastructure, we are of the opinion that the 5% appropriated for the development of the sector is too poor to meet the deficit in the country.

The sum of N998.93 billion is voted for infrastructure which included the Ministries of Works and Housing, Power, Transportation, Aviation and other critical sectors of the economy.

The 5% allocation to infrastructure is insufficient, considering that the sector is largely in deficit across the country.

If the government had invested in infrastructural development over the years, perhaps the flooding we are experiencing now wouldn’t have happened in the first place.

The over 2.5 million people displaced by flood; the over 500 deaths recorded so far and businesses destroyed wouldn’t have occurred if there were enough investments in infrastructure.

Looking at the 2023 budget, we wonder where the focus of the Federal Government is.

Infrastructure and insecurity are among the major challenges affecting the economy of the country, and infrastructure is critical to growing the nation’s economy.

The issue of power supply is a problem; industries are collapsing because of poor power; people cannot distribute their goods to various locations because of bad roads.

A country that is looking at growing its economy and putting 5% for infrastructural development cannot be said to be getting it right.

We call on the National Assembly to thoroughly review the budget in the interest of the country.