By Merit Ibe
The Centre for the Promotion of Private Enterprise(CPPE) has remarked that the the 2023 federal government budget, which was presented to the National Assembly by president Muhammadu Buhari yesterday, has further amplified the troubled fiscal outlook for the economy.
Chief Executive Officer of the Centre, Dr Muda Yusuf, who made the statement noted that expenditure continues to accelerate amid consistent weak revenue performance.
Analysing the budget of #20.51 trillion with revenue projection of #9.73 trillion, which implies a deficit of #10.78 trillion, the CPPE boss noted that in all probability, the deficit will be much bigger by year end because of the track record of revenue under performance over the last couple of years.
He projected that the country was likely to see an acceleration of CBN financing of fiscal deficit given the revenue performance trajectory.
Yusuf however, noted that though the budget themed a budget of Consolidation and Transition, the incoming administration would have to grapple with profound fiscal headwinds given the ominous fiscal outlook for 2023.
He advised that as the campaigns progress, it is important for politicians to manage expectations, adding that tough policy choices will have to be made to reset the economy.
“The public debt stock is growing and currently at #42 trillion. With additional new borrowing of #8.8 trillion, the debt profile will be inching close to “50 trillion naira by May next year.
” If we take into account the borrowing from the CBN [ways and means], which is currently about 20 trillion naira, we will have a total debt of 70 trillion naira by end of 2023. This should be a cause for concern.”
Yusuf recommended that a number of issues need to be addressed to achieve the fiscal sustainability aspiration.
“Government owned enterprises managing huge economic assets need to justify the value of assets at their disposal.
“Returns on investment on those assets have been consistently sub optimal for many years. These include government enterprises in maritime, and oil and gas, for example. It is instructive that some reforms are ongoing at the NNPC.
“Oil revenue performance should be much better given the prevailing global oil price. Lapses in the petroleum upstream ecosystem needs to be urgently addressed. This includes the impunity of crude oil theft and vandalism of oil facilities.
“The foreign exchange policy regime is adversely impacting on business environment and needs to be urgently addressed.
“Weak private sector performance would naturally affect non oil tax revenues.
“There is a need for budget reforms. The budgetary appropriations must reflect urgent national economic priorities. “There are also concerns about value for money and other forms of fiscal leakages. The Auditor General of the federation had severally raised these concerns.
“We agree with the President that funding of tertiary education cannot be adequately and sustainably supported exclusively from government budget. “New funding models need to be urgently explored for adequacy and sustainable funding.
” Current budgetary provisions need to be augmented from new innovative funding windows.
“The same is true for road infrastructure financing. The road fund bill needs to be revisited to ensure sustainable funding of road infrastructure across the country. Budget funding for roads cannot guarantee quality road infrastructure for a country over 200 million people.
“We note the reference by Mr President to PPP options for infrastructure financing. However, the macroeconomic and regulatory environment needs to improve to inspire confidence of investors in infrastructure within the PPP framework.
“Current macroeconomic and foreign exchange policy regime are major disincentives to investors in infrastructure, especially the foreign investors.
“We need the inflow of such foreign capital to complement government funding in infrastructure.
“We note that this budget is a budget of Transition. However, the incoming administration would have to grapple with profound fiscal headwinds given the ominous fiscal outlook for 2023. As the campaigns progress, it is important for politicians to manage expectations. Tough policy choices will have to be made to reset the economy.”