On Thursday, 7th October, 2021, President Muhammadu Buhari presented the N16.39 trillion budget proposal to a joint session of the National Assembly.
‘Budget of Economic Growth and Sustainability,’ the budget is titled.
The oil benchmark for the 2022 appropriation is $57 per barrel, with an N410.5 per dollar exchange rate.
The budget is expected to boost GDP growth by 4.2 percent, while inflation is expected to be 13%.
Nigeria’s oil production, including condensates, will be 1.88 million barrels per day.
The budget deficit is predicted to be N6.26 trillion, which is higher than the fiscal treasury, and would be financed with N5.01 trillion in borrowing.
“We expect the total fiscal operations of the Federal Government to result in a deficit of 6.26 trillion Naira. This represents 3.39 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act 2007. Countries around the world have to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive,” Buhari said.
The expected revenue for the 2022 appropriation is N10.133trn, with oil revenue of N31.6trn, non-oil revenue of N2.133trn, and independent revenue of 1.82trn.
The revenues include N63.38 billion in grants and subsidies, as well as money from the 63 government enterprises.
However, President Buhari stated that the country’s debts are still manageable.
Subsidies on petroleum goods, according to Buhari, have depleted funds that should have been spent for the 2021 budget.
Despite revenue issues, he said his administration had satisfied debt servicing responsibilities.
The President claims that progress on the country’s rail projects is being made, and that plans have been made to complete the Lagos-Ibadan rail route.
The President stated that progress is being made on electricity projects in order to attain optimal power supply by 2025.
He predicted that the passing of the Petroleum Industry Act will result in a reduction in spending and an increase in investment in the oil sector.
Buhari had already submitted the upper legislative house with a revised 2022-2024 Medium Term Expenditure (MTEF) and Fiscal Strategy Paper (FSP) for approval.
The Senate approved the MTEF and the FSP for the first time on September 22, with a budget of N13.98 trillion for 2022.
BREAKDOWN OF THE 2022 REVENUE ESTIMATES
PARAMETERS AND FISCAL ASSUMPTIONS
Distinguished Members of the National Assembly, the 2022 to 2024 Medium Term Expenditure Framework and Fiscal Strategy Paper sets out the parameters for the 2022 Budget as follows:
a. Conservative oil price benchmark of 57 US Dollars per barrel;
b. Daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day);
c. Exchange rate of four 410.15 per US Dollar; and
d. Projected GDP growth rate of 4.2 percent and 13 percent inflation rate.
Based on these fiscal assumptions and parameters, total federally-collectible revenue is estimated at 17.70 trillion Naira in 2022.
Total federally distributable revenue is estimated at 12.72 trillion Naira in 2022 while total revenue available to fund the 2022 Federal Budget is estimated at 10.13 trillion Naira. This includes Grants and Aid of 63.38 billion Naira, as well as the revenues of 63 Government-Owned Enterprises.
Oil revenue is projected at 3.16 trillion, Non-oil taxes are estimated at 2.13 trillion Naira and FGN Independent revenues are projected to be 1.82 trillion Naira.
PLANNED 2022 EXPENDITURE
A total expenditure of sixteen point three-nine (16.39) trillion Naira is proposed for the Federal Government in 2022. The proposed expenditure comprises:
a. Statutory Transfers of 768.28 billion Naira;
b. Non-debt Recurrent Costs of 6.83 trillion;
c. Personnel Costs of 4.11 trillion Naira;
d. Pensions, Gratuities and Retirees’ Benefits 577.0 billion Naira;
e. Overheads of 792.39 billion Naira;
f. Capital Expenditure of 5.35 trillion Naira, including the capital component of Statutory Transfers;
g. Debt Service of 3.61 trillion Naira; and
h. Sinking Fund of 292.71 billion Naira to retire certain maturing bonds.
