2023 Budget: LCCI Reiterates Concerns Over Debt Costs

The Lagos Chamber of Commerce and Industry(LCCI) has reiterated its concerns over debt costs, looking at the deficit financing to come from borrowing to finance the 2023 budget.

The president & chairman of LCCI, Dr. Michael Olawale-Cole, stated this at the ‘2023 economic review and budget analysis session’ organised by the chamber in Lagos recently.

Olawale-Cole said: “we need to re-assess our debt sources to borrow at lower rates and also embrace more non-tax revenue sources. The revenue and capital expenditure performance of the 2022 budget indicates the fiscal resilience of the Nigerian economy.

This, he said, should be consolidated for better outcomes in the 2023 fiscal year, adding that, a higher non-oil revenue projection in comparison to oil revenue, if effectively implemented and actualised, will minimise the impact of external shocks on our revenues.

With the 2023 federal government budget tagged ‘budget of fiscal consolidation and transition’, he said, the federal government plans to spend the sum of N21.83 trillion in 2023, an increase of N1.32 trillion over the initial executive proposal for a total expenditure of N20.51 trillion and from the sum of N17.13 trillion in 2022. This budget size, he noted, reaffirms the commitment of the government to pursuing an expansionary fiscal policy to stabilise growth and deepen the diversification of the Nigerian economy.

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Believing that the overall budget deficit at N11.34 trillion for 2023 represents 5.03 per cent of GDP, he stressed that, the budget deficit is to be financed mainly by borrowings made up of domestic sources of N7.04 trillion, foreign sources of N1.76 trillion, multi-lateral/bi-lateral loan drawdowns of N1.77 billion, and privatisation proceeds of N206.18 billion.

He pointed out that the Nigerian economy in 2022 recorded growth in the first three quarters but slowed down from 3.54 per cent in Q2 to 2.25 per cent in Q3, expecting to have a growth report for the last quarter of 2022.

“The slowdown was driven by a decline in aggregate demand in the face of inflation spikes, commodities’ supply chain disruption, high energy costs, and forex scarcity. In 2023, we expect to see growth in sectors like manufacturing, agriculture, transport, telecommunications, and trade,” he pointed out.

He revealed that the essence of hosting this economic outlook and budget analysis session was to facilitate conversations and share perspectives from diverse sectors of the economy on the details of the budget and what they mean for business in 2023, saying, “the session is also aim to enlighten stakeholders, corporate and business executives on how the budget will likely impact sectors and industries of the economy and how they can explore the opportunities for profitability and sustainability.”