By Tony Obiechina and Ubong Ukpong, Abuja

The Federal Government has earmarked N3.61trillion of the estimated N16.39trn to debts services with revenue target of N17.70trn in the 2022 budget.

The budget, presented yesterday by President Muhammadu Buhari, also has Sinking Fund of N292.

Giving these spending, President Buhari disclosed that the Federal Government expects “the total fiscal operations to result in a deficit of N6.26 trillion

The 2022 budget has been designed to be gender responsive as Ministries Departments and Agencies (MDAs) have been mandated to factor in gender issues in their budget preparation.

What this means is that the recently approved parternity leave for civil servants will be captured in the 2022 budget among other gender responsive issues the MDAs will consider to include in the budget.

In past budgets, travel and training provisions capture more men than women also most MDAs do have crèche for nursing mothers who are expected to resume work while tending to their infants.

Addressing the National Assembly before presenting the 2022 budget, President Buhari said: “This is also the first in our history, where MDAs were clearly advised on gender responsive budgeting”. 

This decision President Buhari noted will form “part of critical steps in our efforts to distribute resources fairly and reach vulnerable groups of our society”.

The 2022 Appropriation has been tagged a Budget of Economic Growth and Sustainability has made fiscal assumptions and parameters with total federally-collectible revenue estimated at N17.70 trillion.

According to President Muhammadu Buhari “total federally distributable revenue is estimated at N12.72 trillion in 2022 while total revenue available to fund the 2022 Federal Budget is estimated at N10.13 trillion. This includes Grants and Aid of N63.38 billion, as well as the revenues of 63 Government-Owned Enterprises”.

A total expenditure of N16.39 trillion is proposed for the Federal Government in 2022 comprising: Statutory Transfers of N768.28 billion; Non-debt Recurrent Costs of N6.83 trillion; Personnel Costs of N4.11 trillion; Pensions, Gratuities and Retirees’ Benefits N577.0 billion.

Others include: Overheads of N792.39 billion; Capital Expenditure of N5.35 trillion, including the capital component of Statutory Transfers; Debt Service of N3.61 trillion; and  Sinking Fund of N292.71 billion to retire certain maturing bonds.

Giving these spending, President Buhari disclosed that the federal government expects “the total fiscal operations of the Federal Government to result in a deficit of N6.26 trillion”. 

This according to the President “represents 3.39 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act 2007”.

He defended the deficit crossing Fiscal Responsibility Act threshold by arguing that “Countries around the world have to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive. 

He added that “we need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country”.

The federal government plan to finance this deficit through new borrowings totalling N5.01 trillion, N90.73 billion from Privatization Proceeds and N1.16 trillion drawdowns on loans secured for specific development projects.

Speaking on the troubling level of borrowing the country has engaged in, President Buhari admitted that the borrowings have grown to a level of concern but assured that “the debt level of the Federal Government is still within sustainable limits. Borrowings are to specific strategic projects and can be verified publicly”.

Government, President Buhari said “used the loans to finance critical development projects and programmes aimed at improving our economic environment and ensuring effective delivery of public services to our people. 

To this end, government focused on: the completion of major road and rail projects; the effective implementation of Power sector projects; the provision of potable water; construction of irrigation infrastructure and dams across the country; and critical health projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Care Centres across the six geopolitical zones.

Government’s target over the medium term the President disclosed “is to grow our Revenue-to-GDP ratio from about eight percent currently to  15 percent by 2025”.

“At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable” President Buhari assured.

To enhance revenue mobilisation, the federal government Buhari said will continue with its strategies of achieving the following objectives: enhance tax and excise revenues through policy reforms and tax administration measures; review the policy effectiveness of tax waivers and concessions; boost customs revenue through the e-Customs and Single Window initiatives; and safeguard revenues from the oil and gas sector.

The 2022 budget parameters are predicated on the 2022 to 2024 Medium Term Expenditure Framework and Fiscal Strategy Paper which set out the parameters as follows: oil price benchmark of US$57 per barrel; daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate of four N410.15 per US Dollar; and Projected GDP growth rate of 4.2 percent and 13 percent inflation rate.

 In 2022, Government has pledged to strengthen the frameworks for concessions and public private partnerships (PPPs). “Capital projects that are good candidates for PPP by their nature will be developed for private sector participation” the President said.

Also in the coming year, government will “explore available opportunities in the existing ecosystem of green finance including the implementation of our Sovereign Green Bond Programme and leveraging debt-for-climate swap mechanisms”.

Buhari also disclosed that  the Federal Government  was expecting N17.70 trillion as revenue to fund the year 2022 budget.

President Muhammadu Buhari, disclosed this while presenting his N16.39 trillion 2022 budget proposals to the joint session of the National Assembly in Abuja.

He cited COVID-19 protocol, but said that the Minister of Finance, Budget and National planning would do the needful on a later time, adding that security and intelligence were his priorities in the budget.

He reminded that the parameters and Fiscal assumptions of the budget were based in the Medium Term Expensive Framework and Fiscal Strategy Paper (MTEF/FSP), 2022-2024, which had shown conservative oil price benchmark of 57 US Dollars per barrel, daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day), exchange rate of four 410.15 per US Dollar; and 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. 

“A total expenditure of sixteen point three-nine (16.39) trillion Naira is proposed for the Federal Government in 2022. The proposed expenditure comprises: Statutory Transfers of 768.28 billion Naira; Non-debt Recurrent Costs of 6.83 trillion; Personnel Costs of 4.11 trillion Naira; Pensions, Gratuities and Retirees’ Benefits 577.0 billion Naira;

Overheads of 792.39 billion Naira; Capital Expenditure of 5.35 trillion Naira, including the capital component of Statutory Transfers; Debt Service of 3.61 trillion Naira; and Sinking Fund of 292.71 billion Naira to retire certain maturing bonds.

“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”, the President declared.

Justifying the exceeding of threshold, he said countries around the world had to of necessity over-shoot their fiscal thresholds for the economies to survive and thrive.

“We need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country.

“We plan to finance the deficit mainly by new borrowings totalling 5.01 trillion Naira, 90.73 billion Naira from Privatization Proceeds and 1.16 trillion Naira drawdowns on loans secured for specific development projects.

“Some have expressed concern over our resort to borrowing to finance our fiscal gaps. They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits. Borrowings are to specific strategic projects and can be verified publicly.

“As you are aware, we have witnessed two economic recessions within the period of this Administration. In both cases, we had to spend our way out of recession, which necessitated a resort to growing the public debt. It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt.

“Our target over the medium term is to grow our Revenue-to-GDP ratio from about 8 percent currently to  15 percent by 2025. At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable.

“Very importantly, we have endeavoured to use the loans to finance critical development projects and programmes aimed at improving our economic environment and ensuring effective delivery of public services to our people. We focused on; the completion of major road and rail projects; the effective implementation of Power sector projects; the provision of potable water;

construction of irrigation infrastructure and dams across the country; and

critical health projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Care Centres across the six geopolitical zones.”

He said in 2022, Government would further strengthen the frameworks for concessions and public private partnerships (PPPs), adding that capital projects that are good candidates for PPP by their nature would be developed for private sector participation.

“We will also explore available opportunities in the existing ecosystem of green finance including the implementation of our Sovereign Green Bond Programme and leveraging debt-for-climate swap mechanisms.”

He said government would sustain it’s strategies to improve revenue mobilisation in 2022 with the goal of achieving the following objectives:

“Enhance tax and excise revenues through policy reforms and tax administration measures; Review the policy effectiveness of tax waivers and concessions;Boost customs revenue through the e-Customs and Single Window initiatives; and Safeguard revenues from the oil and gas sector.

“Distinguished Senators and Honourable Members, I commend you for the passage of the Petroleum Industry Act 2021. It is my hope that the implementation of the law will boost confidence in our economy and attract substantial investments in the sector.

Finance Bill 2022

“In line with our plan to accompany annual budgets with Finance Bills, partly to support the realization of fiscal projections, current tax and fiscal laws are being reviewed to produce a draft Finance Bill 2022.

“It is our intention that once ongoing consultations are completed, the Finance Bill would be submitted to the National Assembly to be considered alongside the 2022 Appropriation Bill.”

The President said the fiscal year 2022 was very crucial in efforts to ensure that critical projects were completed, put to use and improve the general living conditions of the people.

“It is with great pleasure therefore, that I lay before this distinguished Joint Session of the National Assembly, the 2022 Budget Proposals of the Federal Government of Nigeria.”