MAN Director-General, Segun Ajayi-Kadir, told one of our correspondents on the phone, “The N7.9tn this year is a source of worry for private businesses. Already we are burdened by our loan obligations; so running an additional deficit that is likely to increase our debt position is worrying.
“Debt in itself is not the problem if it is expended to reflate the economy, build infrastructure, facilitate productivity and trade.
“Using it to finance consumption or recurrent expenditure leaves you in a worse position.”
Ajayi-Kadir stated that the National Assembly had the final say on the budget and should protect the future of the country.
He said, “They have a duty to ensure that the future of the country is protected. So they need to be mindful of what the N7.9tn is going be financing.
“They provide oversight functions even in execution. So care should be exercised in making sure it is done for the right purpose.
“If it is applied properly, as our infrastructure needs financing, it might be better off for the economy.”
The Chief Executive Officer, Economic Associates, Dr Ayo Teriba, said, “Nigeria should aggressively restructure its debt portfolio by replacing interest paying commercial bonds with interest-free commercial bonds on a wholesale basis to drastically reduce or eliminate the N4.9tn annual average interest payments that is projected in the 2022-2024 MTEF.
“Rather than issue interest paying bonds to fund infrastructure, we should create special purpose vehicles for packaging infrastructure assets for interest-free financing through asset-linked non-convertible or convertible bonds.
“Ideally, this should happen in a rule-based fiscal regime with an independent advisory fiscal commission as watchdog.”
According to the budget office, in 2020, the total expenditure was N10.02tn, 0.43 per cent above the N9.97tn projected.
A total of N4.65tn was spent on non-debt recurrent expenditure in 2020. Total debt service in 2020 was N2.43tn. Statutory transfers were N428.03bn. A total of N1.95tn was released and cash backed for the implementation of 2020 capital projects and programmes of MDAs.
Fiscal deficit was N6.59tn (14.17 per cent of the 2020 GDP). The deficit was partly-financed through domestic borrowing of N2.06tn.
The Manufacturers’ Association of Nigeria and economic experts on Wednesday expressed concern about the high deficit in the 2022 budget.
MAN and experts including Prof. Pat Utomi in separate interviews with The PUNCH, warned both the executive and the National Assembly against endangering the future of the country.
Federal Government had on Wednesday said it planned to borrow more funds to finance the N16.45tn 2022 budget.
According to the government, the total money borrowed as of July 22 was ‘only 23 per cent’ of the Gross Domestic Product.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed these to State House Correspondents after the Federal Executive Council at its meeting on Wednesday approved N16.39tn for the 2022 Appropriation Bill.
The meeting was presided over by the President, Major General Muhammadu Buhari (retd.), at the Presidential Villa, Abuja.
SENATE PASSES MTEF BILL
The Senate on Wednesday passed the revised Medium Term Expenditure Framework and Fiscal Strategy Paper sent to the National Assembly by the President, Major General Muhammadu Buhari (retd.), on Tuesday.
The MTEF and FSP are parameters upon which yearly appropriation bills are predicated.
Buhari had in the 2022-2024 MTEF/FSP, increased the projected aggregate expenditure of the Federal Government for the 2022 fiscal year from N13.98tn to N16.45tn.
However, the Senate on Wednesday, approved the sum of N16.39tn as Federal Government’s projected aggregate expenditure for year 2022.
The red chamber, had by its action, reduced by N60bn, the N16.45trn total expenditure proposed by the President.
Buhari had in his letter requesting for a review of the 2022-2024 MTEF, explained that the needed adjustments were important to reflect ‘the new fiscal terms in the Petroleum Industry Act’.
The Federal Executive Council had initially approved N13.98tn as the proposed 2022 aggregate expenditure of the Federal Government prior to the passage of the PIA.
Meanwhile, Buhari will on Thursday at noon present the 2022 budget to the National Assembly.
The presentation will be made during a joint session of the National Assembly chambers.
Buhari made this known in a letter dated October 5, 2021, and read during plenary by the Senate President, Ahmad Lawan.
The House of Representatives also on Wednesday passed the revised 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper, one of a few legislations to have enjoyed such accelerated processing.
The passage, which came about 24 hours after the President, Major General Muhammadu Buhari (retd.), presented the executive bill for amendment, followed the laying, consideration and adoption of the report by the House Committee on Finance at the plenary on Wednesday.