The Federal Executive Council (FEC) has approved the 2022 – 2024 Medium Term Expenditure Framework and the Fiscal Strategy Paper (MTEF & FSP), which allows the funding of a N5.26 trillion budget deficit through borrowings.
The Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, disclosed this Wednesday while briefing State House reporters after the federal cabinet meeting presided over by President Muhammadu Buhari.
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She said that her ministry presented a memo to FEC with a 2022 projected revenue of N6.54 trillion and N2.62 trillion to the Federation Account.
According to her, the revenue is projected to increase in 2023 to N9.15 trillion.
She said the MTF FSP described the federal government’s socio-economic and developmental objectives and priorities for the reporting period of 2022 to 2024 as well as the fiscal strategies to be put in place, and policies to achieve the priorities.
The minister said the report to the council highlighted the key drivers of the government’s revenue and the spending plans.
“The goal for us is to improve the nation’s macro-economic situation or reposition the economy on the path of inclusive diversified as well as sustainable.
“The MTF FSP consists of medium-term macro-economic projections, fiscal targets and estimates of revenue and expenditure including government’s financial obligations,” she said.
“We also reported to council the budget deficit and the financing items for the expenditure.
“The budget deficit that is projected for 2022 is 5.62 trillion, up from 5.60 trillion in 2021. This amount represents 3.05% of the estimated GDP, which is slightly above the 3% threshold that is specified in the fiscal responsibility, Act.
“The FRA empowers Mr president to exceed the threshold in his opinion, the nation faces national security threats. And it is our opinion on fact agreed that we can exceed.
“The deficit is going to be financed by new foreign borrowing and domestic borrowing, both domestic and foreign in the sum of 4.89 trillion on privatisation proceeds of 90.73 billion and drawdowns from existing project tied loans of 635 billion,” she added.
The minister said she provided to the council, a macroeconomic background, which showed that the Nigerian economy has recovered from a negative growth of minus 1.8% in 2020 to 2.5%.
She added: “Also, the inflation has moderated from 19 months high. It’s moderated for two months now, which is coming down to 17.93%. And our foreign reserves stand at 34.2 billion at the end of May, which is 640 million declined from the previous month.
“The key macro assumptions that were presented and council approved is that there’ll be a crude oil benchmark price of $57 per barrel of crude oil for 2022, crude oil production of 1.8 8 million barrels per day, and our exchange rate of 410 or 15,l to one US dollar, an inflation rate of 10% in 2022, and a nominal GDP of 149.369 trillion.”