BudgIT Nigeria, has knocked the federal government over continuous breach of the Fiscal Responsibility Act with unsustainable deficits.
This is coming in the wake of President Muhammadu Buhari assenting to the 2023 Budget of N21.83 trillion, with its attendant huge N10.7 trillion deficit.
This was pointed out by the head, Research and Policy Advisory, BudgIT Nigeria, Iniobong Usen, while appearing on AIT News Hour bulletin via zoom from Lagos.
According to Usen, there are clear provisions in the FRA which state that fiscal deficit should not be more than three per cent, and this has the Buhari-led administration had breached several times, hence wants the National Assembly to increase it so it can accommodate the recurring deficits.
He said: “If you look at the Fiscal Responsibility Act there are clear provisions that the fiscal deficit should not to more than three per cent of your annual Gross Domestic Product, (GDP), but what we see in recent years is that Federal Government has continued to breach that section of the Fiscal Responsibility Act by increasing deficits to unsustainable levels.
“During the presentation, the Minister of Finance said that they are working with the National Assembly to try to review that provision of the Act to make more room for the government to increase the deficit. So why do you break the law before amend the law?”
He also said that the N10.4 trillion revenue generation projection is highly unrealistic, “If you look at other components; the debt service, revenue projections are in compendium with how government has performed overtime you see it is highly unrealistic with a revenue projection of over about N10.4 trillion and that is highly unrealistic. For the first 11 solid years we have done only about N6.5 trillion and that has been the highest historically.
“Where is that additional N3trillion to N4 trillion is going to come from considering the fact that we are going into an election year? I do not think it is implementable in summary.
Still on revenue generation to implement the 2023 budget, he also pointed that a lot of gains that would have been made has been lost to subsidy payment, which he doubted if subsidy will be ended in June 2023.
“With our subsidy bill which is projected to cost us about N6.5 trillion you would see that a lot of gains that would have been made as a result of the increase in price of crude oil is lost to subsidy payment.
“And so if we are going to continue with business as usual which I presume will happen even if the current budget suggests that the subsidy regime will end in June I see that we will continue to lose a lot of revenue to the subsidy regime in oil.
“For non-oil, the CIT, VAT, Customs revenue performed above projections but if you look at independent revenues from the GOEs even if we are performing quiet better than before I think we could do a lot more.
“If you look at the operating sources from the GOEs, if the government is able to rally round the MDAs better we should be able to get a lot of revenues from the operating surpluses which are remitted to the FEC CRS Account of the federal government by the MDAs.
However, he (Usen) scored the solid minerals sector low in revenue generation, and called for adequate attention by the government to galvanise the sector.
“Then if you come to the solid minerals sector, they have performed absolutely abysmal overtime. If you look at the records we have not done more N7 billion as revenue from the solid minerals sector annually overtime.
“And if you look at the length and breadth of the federation, every State is left with at least one mineral source in commercial quantity. Why have we not been able to sort of develop that sector and be able to get enough revenues into the pool from that particular sector?”
