According to a recent data study by the Budget Office of the Federation, President Muhammadu Buhari's administration expects the overall budget deficit to reach N47.43 trillion.
The study of the budget statistics includes both the actual and projected budget deficits for the fiscal years 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, and 2023.
According to data, deficit funding increased from N2.41 trillion in 2016 to N11.34 trillion in 2023, a 370.54 per cent increase.
Total deficit financing was N841.48 billion in Q3 and Q4 of 2015, N2.41 trillion in 2016, N3.81 trillion in 2017, N3.65 trillion in 2018, N4.18 trillion in 2019, N6.59 trillion in 2020, and N6.44 trillion in 2021.
The budget agency anticipates the deficit to reach N8.17 trillion even though the 2022 overall deficit has not yet been disclosed (of which N6.37tn had been spent as of November 30, 2022). The office also projects a large funding shortfall of N8.17 trillion for the 2023 fiscal year.
The Federal Government spent N23.66 trillion on personnel costs, pensions, overhead costs, the presidential amnesty program, other service-wide votes, and special interventions between Q3 of 2015, Q4 of 2016, 2017, 2018, 2019, 2020, the first three quarters of 2021, and the first four months of 2022.
In addition, it spent N10.47 trillion on capital expenditures and N14.13 trillion on servicing domestic and foreign loans.
Professor Akpan Ekpo, an economist, explained the government budget deficit by saying, "This means that expenditure has exceeded revenue since they have to borrow, which is why there is a deficit.
“They can’t raise enough domestic resources to finance spending. That gap is a deficit. Talking about GDP, by the rules, it should not be more than a certain percentage of GDP, but it has exceeded that.”
According to the former Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, there is a need to keep the budget deficit under three per cent of GDP because of the Fiscal Responsibility Act, 2007, and in accordance with the international norm.
The country’s budget deficit to the GDP ratio had risen from 1.69 per cent in 2015 to 2.37 per cent in 2016. It increased to 2.85 per cent in 2018, and 2.92 per cent of GDP in 2019. The Federal Government expects the deficit-to-GDP ratio to be 5.03 per cent of the 2023 budget.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had disclosed that the government was struggling to raise revenue for its expenditure.
In a document titled ‘Public Consultation on the Draft 2023 – 2025 MTFF/FSP,’ she said, “Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilisation problem has been compounded by recent economic recessions.”
While defending the 2022 budget, she stated, “If we just depend on the revenues that we get, even though our revenues have increased, the operational expenditure of the government, including salaries and other overheads, is barely covered or swallowed up by the revenue.
“So, we need to borrow to be able to build these projects that will ensure that we’re able to develop on a sustainable basis. Nigeria’s borrowing has been of great concern and has elicited a lot of discussions. But if you look at the total size of the borrowing, it is still within healthy and sustainable limits.”