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Sunday, February 25, 2024

FG faces fiscal strain as 2023 budget reveals soaring expenditures

Agreed wage, national defense, and non-debt recurrent costs to consume N7.76 trillion in 2023

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The Federal Government of Nigeria is grappling with a fiscal challenge as the recently approved 2023 budget unveils staggering expenditures, raising concerns about the sustainability of the nation’s finances. The budget, including a supplementary allocation of N2.18 trillion, sheds light on the formidable demands on the government’s coffers, with an emphasis on wage agreements, national defense, and escalating recurrent costs.

According to the Minister of Budget and Economic Planning, Abubakar Bagudu, the substantial sum of N605 billion is designated for national defense to fortify security efforts. Another N210 billion is allocated for the payment of wage awards, a part of the negotiated agreement with the Nigeria Labour Congress, promising N35,000 each to approximately 1.5 million federal employees for the months of September through December 2023.

The total budget, including the supplementary allocation, is set to reach N19.81 trillion, with recurrent expenditure accounting for N1.01 trillion and capital expenditure pegged at N1.17 trillion. Notably, the supplementary budget elevates the non-debt recurrent expenditure to N7.76 trillion and capital expenditure to N4.53 trillion.

A significant portion of the recurrent budget, at least N4.31 trillion (55.54 percent), is earmarked for salaries. The government’s expenditure pattern in the first three months of 2023, as reflected in the 2023 Q1 implementation report, reveals spending of N978.10 billion on salaries, N1.24 trillion on non-debt recurrent expenditure, and N175.45 billion on capital expenditure.

Amid these burgeoning expenditures, the government has resorted to borrowing, with N2.30 trillion borrowed so far to finance its budget. The predicted fiscal deficit for the year stands at a staggering N9.01 trillion, highlighting the increasing financial strain on the government.

The Accountant General of the Federation, Mrs. Oluwatoyin Madein, acknowledged the challenging economic reality, stating that dwindling revenue generation compared to escalating expenditures requires continuous efforts to explore revenue-increasing strategies.

Nigeria’s fiscal woes are exacerbated by falling oil production and a persistent struggle to diversify the economy, as acknowledged by the former Minister of Finance, Budget, and National Planning, Zainab Ahmed. The fiscal landscape remains a cause for concern, prompting the government to navigate a delicate balance between meeting expectations and addressing the pressing need for financial sustainability.

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