FG may not budget for capital project in 2023, says finance minister

Finance, Budget and National Planning Minister Hajia Zainab Ahmed said on Monday that the federal government may not be able to forecast treasury-funded investment projects in 2023.

The Minister also said that the budget deficit for the financial year 2023 could be between 11.30 trillion naira and 12.41 trillion naira depending on the choice that will be made by the government on the issue of payment of subsidies on the automotive gasoline otherwise known as gasoline. .

The minister, who spoke during the presentation of the medium-term expenditure framework 2023-2025 and the budget strategy document before the finance committee of the House of Representatives, estimated the government’s total expenditure for 2023 at 19 .76 trillion naira.

She said challenges in crude oil production and deductions of PMS subsidies by NNPC pose significant threats to achieving the country’s revenue growth targets, adding that bold, decisive and urgent action is needed to urgently to address revenue underperformance and expenditure efficiency at national and sub-national levels. levels.

She said: “Under this scenario, the fiscal deficit is projected to be N11.30 trillion in 2023 from N7.35 trillion in 2022. This is 5.01% of estimated GDP, above the threshold of 3% stipulated in the Fiscal Responsibility Act. , 2007.

“In Scenario 1 which she said involves grant funding from January to December, the Minister said ‘given the very limited fiscal space, the fiscal deficit is projected to be N12.41 trillion in 2023, compared to 7.35 trillion naira budgeted in 2022, representing 196% of total FGN revenue or 5.50% of estimated GDP.

“This is significantly above the 3% threshold stipulated in the Fiscal Responsibility Act 2007 and there will be no provision for Treasury-funded MDA capital projects in 2023.”

Giving an overview of government revenue, she also gave two scenarios, stating that in the first scenario, the federal government revenue for 2023 could amount to 6.34 trillion naira, of which only 373.17 trillion naira is expected. come from oil-related revenues while the balance of N5.97 will come from non-oil sources.

Regarding the second scenario, she said, “In addition to subsidy reform, this scenario assumes a comprehensive implementation of the cost limit relative to SOE revenues. With these, FGN revenue for 2023 is projected at N8.46 trillion, of which N99 trillion or 23% is expected to come from oil revenue sources.

On the key assumption on which the 2023 budget will be based, the minister said that the oil benchmark for 2023 is estimated at $70 per barrel with an oil production benchmark of 1.69 million liters per day and an exchange rate of 435.02 naira to the dollar while inflation is expected to rise to 17.16%.

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