Nigeria’s president Muhammadu Buhari unveiled a record N16.39 trillion ($39.8 billion) budget for 2022 on Thursday, with a projected 25% year-on-year rise in government spending as the economy struggles with the impact of the pandemic.
The plan for Africa’s most populous country and top oil exporter assumes crude production of 1.88 million barrels a day and an oil price of $57 per barrel, Muhammadu Buhari said.
The deficit would rise to N6.26 trillion , or 3.39% of GDP, funded mostly by new borrowing and privatisations, he told a joint session of both houses of parliament.
“Some have expressed concern over our resort to borrowing to finance our fiscal gaps. They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits,” he said.
“It is unlikely that our recovery from each of the two recessions would have grown as fast without the sustained government expenditure funded by debt,” he added, referring to a 2016 recession and to the 2020 crisis brought on by COVID-19.
Buhari confirmed a previously published 2022 GDP growth forecast of 4.2% and an inflation projection of 13%.
“Our target over the medium term is to grow our Revenue-to-GDP ratio from about 8 percent currently to 15 percent by 2025,” said Buhari.
“At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Put simply, we do not have a debt sustainability problem, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable.”
Nigeria has passed a string of record budgets since Buhari took office in 2015, but the country has struggled to fund the spending plans due to low revenues. The pandemic has added to the revenue problems.
The economy is projected to grow by up to 3% this year after it expanded by 5% in the second quarter. It contracted in 2020 due to the pandemic, though it managed to exit recession in the fourth quarter, but growth is fragile.
The Senate President, Ahmed Lawan, meanwhile said the National Assembly is committed to passing the budget before the end of year.
Speaking at the assembly chambers, the President tagged the appropriation bill “a Budget of Economic Growth and Sustainability.”
He said the budget will focus on diversifying the economy, with robust MSME growth; investing in critical infrastructure; strengthening security and ensuring good governance; enabling a vibrant, educated and healthy populace; reducing poverty; and minimizing regional, economic and social disparities.
“Defence and internal security will continue to be our top priority,” the President said. “We remain firmly committed to the security of life, property and investment nationwide.
“We will continue to ensure that our gallant men and women in the armed forces, police and paramilitary units are properly equipped, remunerated and well-motivated.”
He also noted that the 2022 budget is the first time in Nigerian history, “where MDAs were clearly advised on gender responsive budgeting.
“These are part of critical steps in our efforts to distribute resources fairly and reach vulnerable groups of our society,” he said.