How we will fund N10.78trn deficit – Finance Minister
Economy National

How we will fund N10.78trn deficit – Finance Minister

The Minister of Finance, Budget and national Planning, Mrs Zqainab Ahmed, on Wednesday, explained how the Federalo Government woulod operate the balanced N20.51 trillion budget on total revenue of N9.73 trillion.

Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning


This is an indication that the government may borrow more than the current estimate of N10.78 trillion in 2023.

Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning, announced this at the public presentation of the breakdown and highlights of the 2023 budget proposal in Abuja.

Ahmed said the overall budget deficit of N10.78 trillion for 2023 would largely be financed through domestic loans.

She said that the budget deficit will be financed mainly by borrowings including domestic sources, N7.04 trillion; foreign sources, N1.76 trillion; multilateral and bi-lateral loan drawdowns, N1.77 billion and expected N206.18 billion proceeds from the privatisation of national assets.

“There is a continuing need to exceed this threshold considering the existential security challenges facing the country,” the minister said.

The minister said Nigeria has no plan to restructure its debt as the government remains committed to meeting its domestic and external debt obligations.

According to her, the government will continue to utilise appropriate debt management tools to streamline the cost and risk profile in the debt portfolio, including through concessional loans, spreading out of debt maturities to avoid bunching and re-profiling of the debt maturities by refinancing short-term debt using long-term debt instruments.

Ahmed explained that the total revenue available to fund the 2023 FGN Budget is estimated at N9.73 trillion.

This includes the gross revenues of 63 Government-Owned Enterprises (GOEs) totalling N3.48 trillion.

Of this, the Federal Government oil revenue share is projected at N1.92 trillion, non-oil taxes are estimated at N2.43 trillion and independent revenues are projected to be N2.21 trillion. Other revenues total N762 billion.

The GOEs will remit N1.06 trillion to the Federal Government’s Consolidated Revenue Fund and retain N2.42 trillion for their expenditures and reserves.

In aggregate, 20 per cent of projected revenues is expected from oil-related sources, while 80 per cent is to be earned from non-oil sources.

The 2023 Aggregate Federal Government expenditure (inclusive of GOEs and project-tied Loans) is projected to be N20.51 trillion, which is 18.4 per cent higher than the amended 2022 Budget.

Recurrent (non-debt) spending is estimated to amount to N8.47 trillion, inclusive of the N200 billion social investment programme.

Aggregate capital expenditure of N5.34 trillion is 26 per cent of total expenditure; and 8.8 per cent lower than the 2022 Budget, inclusive of the capital component of statutory transfers, GOEs capital and project-tied loans expenditures.
At N6.31 trillion, debt service is 30.8 per cent of total expenditure, indicating 71.2 per cent higher than the 2022 estimate as it includes interest payment of N1.2 trillion for Ways and Means.
Total public debt, as a percentage of Gross Domestic Products (GDP) stood at 23.06 per cent as of June 30, within the 55 per cent threshold recommended by the International Monetary Fund (IMF) and World Bank (WB) as well as Nigeria’s self-imposed limit of 40 per cent set in the MTDS 2020-2023, even after including the outstanding balance on CBN Ways and Means Advances.

The exposure of the total public debt portfolio to exchange rate risk remains moderate, as the share of domestic debt in the total public debt comprises 60 per cent.

The target ratio under the MTDS 2020-2023 is 70:30, with the Debt Management Office (DMO) expecting to achieve the target by the end of the year 2023.

Ahmed affirmed that the exposure to refinancing risk remained stable as a result of the strategy of issuance of long-dated securities in the domestic and international markets in addition to accessing long-term funds from multilateral and bilateral lenders.

She said some of the parameters underlying the 2023 projections deviate from the projections in the National Development Plan (NDP) 2021-2025.

“They have been updated based on a combination of current realities and a modified medium-term outlook.”

The real GDP growth is projected at 3.75 per cent in 2023 compared to 4.39 per cent in the NDP.

Growth is expected to moderate to 3.30 per cent in 2024 before picking up to 3.46 per cent in 2025.

The inflation rate is projected to average 17.16 per cent in 2023, and 14.93 per cent is projected in the NDP for 2023.

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