An economist and the chairman of Chattered Institute of Bankers of Nigeria (CIBN) Abuja branch, Prof. Uche Uwaleke, has expressed worry over the slashing of capital expenditure to 30 per cent in the 2023 budget.
Daily Trust reports that the federal government plans to spend N5.35trn on capital projects in 2023 which is below its target of spending at least 30 per cent of the total budget on capital expenditure.
Recall that on Friday last week, President Muhammadu Buhari presented his last budget as president, amounting to N20.51trn to the joint session of the National Assembly.
A breakdown of the budget shows that statutory transfers will take N744.11bn; non-debt recurrent cost, N8.27trn; personnel cost N4.99trn, while pensions, gratuities and retirees’ benefits get N854.8bn.
Overheads cost is N1.11trn; capital expenditure N5.35trn, and sinking fund N247.73bn to retire certain maturing bonds.
The allocation for capital expenditure is 26.08 per cent of the budget.
Buhari said debt service in 2023 will gulp N6.31trn as the budget has a deficit of N10.78trn.
However, reacting to the budget figures, Prof. Uwaleke stated that the provision for capital projects is worrisome, especially at a time when Nigeria needs more investment in infrastructure.
He said, “It’s equally noteworthy that the Finance Bill will be considered alongside the 2023 Appropriation Bill, as well as the fact that the budget of government-owned enterprises is integrated to promote transparency.
“I think the oil price benchmark of $70 is conservative in line with budget principles. I also think the oil production benchmark of 1.69mbpd is realistic given the assurance by the president that the NNPC Limited is doing something to curb oil theft and pipeline vandalism.
“It is, however, worrisome that capital expenditure as a proportion of total spending has gone down well below the government target of 30% while debt service, at over N6 trillion, is in excess of the amount budgeted for capital expenditure.”
According to Uwaleke, the size of the deficit can be reduced by cutting down on personnel costs.
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