Two weeks ago, Buhari signed the largest budget in Nigeria’s history. Tagged the “Budget of Fiscal Consolidation and Transition’’, this budget plans to leverage taxation to solve the nation’s fiscal woes.
Key takeaways:
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On January 3, 2023, President Buhari signed the largest budget in Nigeria’s history.
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The updated budget presentation shows that the government plans to spend double its earnings, leading to the highest fiscal deficit of ₦10.8 trillion in eight years.
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The government will continue its borrowing streak to fund the deficit, albeit focusing more on domestic than external sources.
In the budget, the federal government (FG) aims to spend ₦21.8 trillion, 2x what it intends to earn (₦11 trillion), leading to a bloated deficit of ₦10.8 trillion—compared to 2022’s actual deficit of ₦6.4 trillion as of November 2022.
The expected revenue, expenditure and deficit mean three things we’ve identified in the past: 1. The government is not earning enough. 2. The government wants to keep spending more. 3. The government will continue to borrow to meet its spending targets.
Today’s article will unpack three themes from the 2023 budget that reiterate these realities and the implications for the broader economy.
Let’s start with revenue. Here, we’ll cover the government's revenue sources (oil and non-oil) and analyse how they plan to improve overall revenue using taxes.
