…….……Oil benchmark price put at $73pb and exchange rate at N437.57 per $1
President Muhammadu Buhari has said that the controversial oil subsidy regime in Nigeria would be discontinued in fiscal 2023, explaining that the stoppage will ensure improved efficiency in public finance.
He also said the stoppage will enable the administration to commit savings from the subsidy to other critical sectors with huge potentials to ameliorate the current socio-economic hardships of ordinary citizens in the country.
Muhammadu Buhari made this disclosure while presenting the 2023 budget proposal tagged ‘Budget of Fiscal Consolidation and Transition’ to the joint session of the National Assembly last weekend.
For the purpose of the 2023 national budget, Buhari put crude oil benchmark price at $73 per barrel for 2023, the exchange rate at N437.57 and daily oil production at 1.69 million barrels per day (mbpd), 1.83mbpd, and 1.83mbpd for 2023, 2024 and 2025 respectively.
While presenting the 2023 budget estimates totaling N20.51 trillion to the lawmakers, listed the privatization proceeds, new borrowings totaling N8.80 trillion and N1.77 trillion drawdowns on bilateral/multilateral loans secured for specific development projects/programmes as major sources targeted to bridge the deficit gap.
Also Read: Reps Accuse NNPC, Others of Stealing $10bn in Fuel Subsidy
Buhari stressed that the removal of fuel subsidy remains one of the key components of the administration’s efforts to improve the efficiency of the budget implementation but government will take measures to avoid a situation that the removal of the subsidy will not socially destabilize the country, including the implementation of programmes to support more vulnerable segments of the society.
“As we seek to grow our government revenues, we must also focus on the efficiency of utilization of our limited resources. Critical steps we are taking include immediate implementation of additional measures towards reducing the cost of governance and the discontinuation of fuel subsidy in 2023 as announced earlier.
“We are, however, mindful of the fact that reducing government spending too drastically can be socially destabilizing, and so will continue to implement programmes to support the more vulnerable segments of society”, he assured.
Also Read: ‘We Have Spent N1.3tn On Fuel subsidy, Refinery Rehabilitation’ – NNPC
The President explained further that the 50% cost-to-income ratio in the Finance Act 2020 had significantly improved operating surplus remittances by government owned enterprises (GOEs) and, therefore, solicited the continuing cooperation of the National Assembly in enforcing the legal provision and other prudential guidelines imposed on the GOEs during the consideration of the budget proposals of the GOEs.
The N20.51 trillion 2023 proposed expenditure comprises Statutory Transfers of N744.11 billion; Non-debt Recurrent Costs of N8.27 trillion; Personnel Costs of N4.99 trillion; Pensions, Gratuities and Retirees’ Benefits of N854.8 billion; and Overheads of N1.11 trillion.
Others are Capital Expenditure of N5.35 trillion, including the capital component of Statutory Transfers; Debt Service of N6.31 trillion; and Sinking Fund of N247.73 billion to retire certain maturing bonds.
On revenue generation, he told the lawmakers that the revenue collection and expenditure management reforms the government has been implementing were yielding positive results, with recent significant improvements in non-oil revenue performance.
Also Read: Removal Of Fuel Subsidy Will Solve Fuel Supply Shortage – Oil Marketers
Buhari pointed out, however, that while the government continues to implement revenue administration reforms and improve the collection efficiency, there was an urgent need to find new ways of generating revenue.
It would be recalled that both the Senate and the House had earlier last week passed the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), in preparation for the presentation.
The MTEF/FSP is a document that contains parameters upon which the annual budget is prepared.
According to the document approved by the lawmakers, the estimated expenditure for the 2023 fiscal year is N19.7 trillion with Total Recurrent (Non-debt) of N8.53 trillion; Personnel Costs (MDAs) of N827.8 billion; and Capital expenditure (exclusive of Transfers) N3.96 trillion.
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