President Muhammadu Buhari on Friday said the 2023 budget deficit would be financed through new borrowing of 8.8 trillion naira as well 206.2 billion naira from the privatization of state enterprises.
Buhari said his government had no choice but to borrow its way out of two recessions in the past seven years, adding that amidst revenue challenges, his administration has met the debt service commitments.
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Buhari during his budget presentation speech said the country’s budget debt will widen to 4.78% next year as the government cranks up spending as the country — Africa’s biggest economy — could no longer continue its fuel subsidy policy.
The administration early this year planned to remove subsidies worth $9.6 billion as part of fiscal and petroleum sector reforms but postponed it due to fears of igniting protests.
Some Nigerians described the subsidy as the only benefit enjoyed in a corrupt country.
Although Buhari has not disclosed the date, the subsidy would stop despite being the major campaign issue for his replacement in February presidential elections.
Briefing the National Assembly, he said removing the subsidy was one of the critical steps to cut spending, which will rise to 20.51 trillion naira ($47.4 billion) next year, up 18.4% from this year.
Buhari further said the petrol subsidy has been a recurring and controversial public policy issue since the early eighties and its current fiscal impact has shown that the policy is unsustainable.
He, however, noted that Nigeria’s fiscal troubles have worsened due to low oil production due to crude theft and missing on a price boom.
“Despite our revenue challenges, we have consistently met our debt service commitments,” he said.
The economy is projected to grow 3.7% next year, up from 3.55% this year while annual inflation is forecast to remain in double digits, averaging 17.16%.
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