The Federal Executive Council (FEC) on Wednesday approved the 2022 budget proposal of N16.39 trillion.
President Muhammadu Buhari will present the 2022 budget to the joint session of the National Assembly on Thursday.
The Minister of Finance, Budget, and National Planning, Zainab Ahmed, disclosed this to State House correspondents at the end of the FEC meeting presided over by President Muhammadu Buhari in Abuja.
She said the government would continue to borrow to fund infrastructural projects due to paucity of funds.
The minister noted that Nigeria’s revenues could barely accommodate services, saying that despite concerns by the citizens, the government’s borrowings were still within acceptable limits.
Ahmed said: “If we just depend on the revenues that we get, even though our revenues have increased, the operational expenditure of government, including salaries and other overheads, is barely covered or swallowed up by the revenue.
“So, we need to borrow to be able to build these projects that will ensure that we are able to develop on a sustainable basis.
“Nigeria’s borrowing has been of great concern and has elicited a lot of discussions, but if you look at the total size of the borrowing, it is still within healthy and sustainable limits.
“As of July 2021, the total borrowing was 23 percent of the Gross Domestic Product (GDP). When you compare our borrowing to other countries, we are the lowest within the region, lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola.
“We do have a problem with revenue. Our revenues have been increasing. We just reported to Council that our revenues from non-oil had performed as July, at the rate of 111 percent, which means outperforming the prorated budget.
“But our expenditure, especially staff emoluments had been increasing at a very fast rate making it difficult to cope with funding of government.
READ ASLO: Nigeria to borrow another N4.89 trillion to finance 2022 budget
“So, what we have to do is a combination of cutting down our cost, as well as increasing revenue to be able to cope with all that is required for government to do, including salaries, pensions, debt service as well as capital expenditure.”
The minister said the Council noted the changes in the 2022-2024 fiscal projections based on implementation of the Petroleum Industry Act 2021 and other necessary expenditures that should be accommodated in the 2022 budget.
According to her, the key assumptions and targets underlying the budget provisions included oil price – $57 per barrel; oil production – 1.88 mbpd; exchange rate – N410.15/$; Oil Revenue – N3.15 trillion and Non-Oil Revenue – N2.13 trillion.
She added: “Others are Federal Government’s Independent Revenue of N1.82 trillion; Total Projected Federal Government Revenue of N10.13 trillion; Debt Service of N3.61 trillion; Statutory Transfers of N768.28 billion (including N462.53 billion capital component) and Personnel costs and Pensions of N4.69 trillion; (inclusive of N617.72 billion for the 63 GOEs).
“Overhead costs of N792.39 billion (inclusive of N451.0 billion for the 63 Government-Owned Enterprises); and Capital expenditure (inclusive of the capital component of Social Investment Programme, capital in Statutory Transfers, capital of 63 GOEs, Capital Supplementation as well as Grants and Donor funding) of N5.35 trillion(inclusive of N647.08 billion for the 63 GOEs).
“The resultant deficit of N6.258 trillion which will be financed by new borrowings of N5.012 trillion (of which domestic – N2.506 trillion and foreign – N2.506 trillion); drawdowns on Project-tied Multilateral/Bilateral loans – N1.156 trillion; and Privatization Proceeds of N90.73 billion.”