For the 2023 fiscal year, the federal government has proposed a total expenditure of N19.76 trillion, Dataphyte’s review of the 2023 budget call circular has revealed.
On the 5th of this month, the Federal Ministry of Finance, Budget and National Planning (FMFBNP) published its 2023 budget call circular with an aggregate expenditure of N19.76 trillion.
A budget circular is a documentary guide issued by the FMFBNP to all Ministries, Departments and Agencies (MDAs). This document stipulates the benchmark for expenditure and provides ceilings for expenditures of MDAs.
The circular guide is prepared based on the government’s Medium Term Expenditure Framework (MTEF) macroeconomic projections for the financial year.
Aside from serving as a guideline, the importance is to ensure that MDAs’ fiscal plans for the year are in tandem with the overall objective and priorities of the federal government.
The N19.76 trillion proposed spending is inclusive of N1.68 trillion for Government Owned Enterprises (GOEs), N40.52 billion for grants/donor-funded projects, and N1.77 trillion for multilateral / bi-lateral loan-funded projects.
If the budget call circular is followed and the projected expenditure is eventually approved by the National Assembly when the President presents the budget by the last quarter of this year, it will be a 14.1% increase from the N17.32 trillion approved budget for 2022.
In this piece, we break down the component parts that make up the N19.76 trillion projected expenditure and other relevant details in the 2023 budget call circular that Nigerians should pay attention to.
Breakdown of Key Expenditures
A breakdown of the proposed budget shows that the expenditure is made up of statutory transfers of N722.11billion. Debt servicing and sinking funds will take up N6.31 trillion and N247.73 billion, respectively.
The projected amount for recurrent expenditure is N8.52 trillion, 43.13% of the total expenditure, while N4.37 trillion is for capital expenditure. The capital expenditure is only 22.11% of the total budget, which is short of the 30% capital budget target set by the Buhari-led administration.
It is worth mentioning that the proposed amount for debt service in the 2023 proposed budget is 44.4% higher than the amount set for capital expenditure.
Projected Revenue for 2023 Budget
According to the budget circular, the projected revenue for 2023 is pegged at N8.64 trillion. This is a 15.13% drop from the N9.97 trillion projected revenue for 2022.
This is the third time since 2015 that there will be a drop in projected revenue from the approved one in the previous year.
The drop in the approved projected revenue in 2020 could be attributed to the coronavirus, which impacted the global economy, Nigeria inclusive. This made the Nigerian government review its projected revenue from the N8.42 trillion initially approved for the fiscal year.
Revenue Sources and how much the Government Projects to Generate
The federal government hopes to generate a total of 8.46 trillion in 2023 but from where?
The highest share of the projected revenue will come from non-oil taxes, a total of N2.43 trillion. Revenue from GOEs will account for N2.23 trillion, while independent revenue is pegged at N2.18 trillion.
The share of oil revenue is projected at N1.86 trillion against the N2.19 trillion expected to be made as oil revenue in 2022. This means that the projected share of oil revenue for 2023 will decline by 15%.
Government to Borrow N11.30 trillion to Finance 2023 Budget
Going by the government’s projected revenue, the 2023 proposed budget will have a deficit of N11.30 trillion which will be financed by borrowing.
The budget deficit for 2023 is a 53.74% increase from the 2022 budget deficit.
The 2023 projected budget deficit raises a bit of concern as it represents 5.01% of the country’s estimated N225.51 trillion Gross Domestic Product (GDP) which is above the 3% threshold stipulated in the Fiscal Responsibility Act (FRA), 2007.