…reduces capital expenditure by N259.315bn
…pegs exchange rate at N410:15/$1US
The Federal Government has proposed to borrow the sum of N5.62 trillion to finance the budget deficit in the 2022 financial year projected at N13.981 trillion.
The Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmad, disclosed this on Monday in Abuja while presenting the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), before the House of Representatives Committee on Finance.
She also informed that the government would be cutting down on capital expenditure in 2022 by at least N259.315 billion.
The minister said the reduction became inevitable due to the economic volatility occasioned by the unstable global oil market as well as adverse effects of COVID-19.
According to her: “On capital expenditure, the sum of N1.759 trillion as opposed to the N2.019 trillion will be available to ministries, departments and agencies of government in 2022.”
She disclosed that the exchange rate had been pegged at N410 to $1, explaining that the projection was likely to come down in favour of the naira in 2023.
Ahmed noted: “The budget deficit and the financing items for the expenditure. The budget deficit that is projected for 2022 is N5.62 trillion, up from N5.60 trillion in 2021.
“The deficit is going to be financed by new foreign borrowing. And domestic borrowing, both domestic and foreign in the sum of N4.89 trillion, then privatisation proceeds of N90.73 billion and drawdowns from existing project titles of N635 billion.
“This amount represents 3.05 per cent of the estimated GDP, which is slightly above the three per cent threshold that is spent as recommended in the Fiscal Responsibility Act.”
On revenue projections, the minister said based on the decision of the Federal Executive Council (FEC), the sum of N6.54 trillion is expected to be realised for the 2022 fiscal year, adding that it was projected to increase in 2023 to N9.15 trillion.
On unemployment, the documents revealed that 82.9 million Nigerians are judged to be living in poverty.
According to the minister, the global economic growth is projected to moderate to 4.9 percent in 2022, just as she warned that Nigeria continues to be exposed to risk aversion in the foreign exchange market and devaluation of the naira.
The MTEF/FSP are documents that describe the Federal Government’s socio-economic and developmental objectives and priorities for the reporting period of 2022 to 2024.