Buhari’s 2022 budget proposal in 5 insightful numbers
President Muhammadu Buhari on Thursday presented Nigeria’s 2022 appropriation bill before lawmakers, seeking the approval of the N16.39 trillion budget which has been tagged “Budget of Economic Growth and Sustainability.”
The highlights of the budget have been summarised in 5 insightful numbers.
The total fiscal operations of the Federal Government is expected to result in a deficit of N6.26 trillion in 2022, an amount that is larger than the country’s entire budget in 2016.
The deficit could however be much higher if Nigeria sticks to its expenditure plan. This is because if the projected revenue of N10.13 trillion follows the trajectory of previous targets, the country could end up with less. Nigeria has attained an average of 55 percent revenue performance since 2016 and that has made analysts criticise the government for raising the bar each year despite obvious challenges in attaining revenue targets. If the same applied in 2022, Abuja could be staring at revenues of N5.57 trillion and a deficit of N10.82 trillion at the end of the year. That’s about the size of the country’s entire 2020 budget.
A higher than planned deficit would lead to further borrowings which puts Nigeria in an even more precarious situation given that its debt service costs relative to revenue is already unsustainable.
Nigeria plans to spend as much as N6.83 trillion on non-debt recurrent expenditure in 2022, 41.7 percent of the total budget.
That’s the single largest expenditure item in the budget and equates to double of Nigeria’s total revenues in 2020.
The figure is also higher than the N5.35 trillion budgeted for capital expenditure and debt service of N3.61 trillion.
The budget throws up concerns over the high cost of governance in Nigeria.
Oil revenue is projected at N3.16 trillion in the budget proposal, making it the single largest source of expected revenue for 2022. It also marks an upgrade from the N2.01 trillion that was budgeted for this year (2021).
Non-oil revenues are estimated to rake in N2.13 trillion, up from N1.49 trillion in 2021 while Independent revenues are projected to contribute N1.82 trillion.
Oil revenues took a bearing in 2020 amid low oil prices and Buhari said in his presentation that lower than planned oil revenues were mainly responsible for actual revenues trailing the budget by 34 percent in the first six months of 2021.
Oil revenues may struggle yet again next year if Nigeria’s production challenges linger and the expensive petrol subsidy continues to erase the gains of higher oil prices.
The budget proposal is predicated on an oil price of $57 per barrel and daily oil production of 1.88 million barrels a day. This includes condensates of 300,000 to 400,000 daily.
Nigeria is yet again expecting money to come from Grants and Aid despite receiving nothing from this source since 2018, according to budget implementation reports available on the website of the finance ministry.
The total revenue available to fund the 2022 Federal Budget is estimated at N10.13 trillion and it includes the revenues of 63 Government-Owned Enterprises as well as Grants and Aid.
The projected GDP growth rate for 2022 is 4.2 percent, a growth that if achieved will be Nigeria’s highest GDP growth in eight years.
The projection is more optimistic than that of the International Monetary Fund which expects the economy to post 2.6 percent growth in 2022.
Other highlights of the budget
Exchange rate was pegged at N410.15 per US Dollar while
Inflation is expected to average 13 percent. The rate is currently running at 17 percent which is well above the CBN’s preferred band of between 6-9 percent.