Nigeria’s 2022 Budget: Where is the Money Going?
Nigeria’s minister of finance, budget and national planning, Zainab Ahmed, made a presentation Friday on how the 2022 budget will be allocated.
Here are the highlights from the presentation:
The Federal Government’s aggregate expenditure for next year, the total money to be spent on salaries, project-tied loans and government owned enterprise is projected to cost N16.39 trillion.
Recurrent (non-debt) spending on items such as repairs and maintenance, operational costs, administrative costs is estimated at N6.83trillion and makes up 41.7% of the total expenditure.
Aggregate Capital Expenditure of N5.35trillion is 32.7% of total expenditure. This is made up of spending on Government Owned Enterprises, Capital and Project-tied loans expenditures and Capital component Statutory Transfers.
At N3.16tn, the repayment of loans or debt servicing gulps 22% of the total expenditure and 35.6% of total revenues.
The provision to retire maturing bonds to local contractors/suppliers of 292.7 billion is 1.79% of total expenditures. This is to payoff backlog of contractual arrears dating back over a decade.
The overall budget deficit is N6.26 trillion. This represents 38% of the total budget and 3.39% of Nigeria’s GDP.
The deficit will be financed mainly by borrowings from domestic sources (N2.51 trillion), foreign sources (N2.51 trillion), and Multi-lateral/Bi-lateral loan drawdowns (N1.16 trillion).
The Defence & Security Sector (at N2.41 trillion) takes 15% of Budget. This amount provides for the Military, Police, Intelligence and Para-Military.
Infrastructure which include the provisions for Works, Housing, Power, Transport, Water Resources, and Aviation sectors account for 8.9% of the budget (at N1.451 trillion).
Social Development & Poverty Reduction Programmes takes 5.3% of the budget (at N863 billion). This is the amount provisioned to cater for Social Investments and Poverty reduction programmes.
The Health Sector will be allocated 5% of total FGN Budget (at N820.2 billion). From this 5%, N711.28bn is the amount provisioned for Federal Ministry of Health and its agencies. N54.87bn for immunization funds, including Counterpart Funding for Donor Supported Programmes, and Global Funds. N54.05 billion will be transferred to Basic Healthcare Provision Fund
The education sector will receive N1.29 trillion (7.9% of FGN Budget) N875.93.85 billion is provisioned for Federal Ministry of Education and its agencies. N108.10 billion was earmarked for Universal Basic Education Commission (UBEC) and N306.00bn will be given to the Tertiary Education Trust Fund (TETFUND) for infrastructure projects in Tertiary Institutions.
From the Minister’s presentation, increase in national expenditure was stimulated by the need to provide for additional and unavoidable critical expenses as well as the need to present an all-inclusive FGN Budget.
Also, the IMF posits that low income developing countries’ GDP Growth is projected to accelerate by 3.9% in 2021, and 4.9% in 2022.
These projections indicate global economy will recover from COVID 19 induced contraction in 2021. Growth is projected to be moderate beyond 2022, thus giving a ray of hope for increase in internally generated revenues.
Borrowings are essential for Capital Expenditure and Human Development, as specified in Section 41(1)a of the Fiscal Responsibility Act 2007. The Federal Government resorts to borrowing to finance fiscal gaps with believing that the debt level is still within sustainable limits.
The purpose for the forum was to harness citizen’s participation and feedback to improve the budget for 2022.