Business a.m
The Federal Executive Council (FEC) has given its approval for a supplementary budget of N2.18 trillion to fund “urgent issues” in 2023. The approval was granted at the council’s weekly meeting on Monday, which was chaired by President Bola Tinubu.
Abubakar Bagudu, the minister of budget and economic planning, announced the details of the supplementary budget after the FEC meeting in Abuja. The minister said that the funds are needed to sustain and accelerate the progress made in security and agriculture, and that a portion of the funds will be allocated to both sectors.
According to Senator Bagudu, the supplementary budget will also include allocations for critical infrastructure projects and social programmes.
Of the N2.18 trillion supplementary budget, N210 billion has been allocated for the payment of wage awards to federal government workers, as negotiated with the Nigeria Labour Congress (NLC). The wage awards include a N30,000 minimum wage and an increase in the consequential adjustment to workers’ salaries. The payment of these wage awards is expected to boost the purchasing power of workers and stimulate economic activity in the country.
According to the minister, the federal government has allocated N18 billion from the supplementary budget to the Independent National Electoral Commission (INEC) to conduct the Bayelsa, Imo, and Kogi State off-cycle elections in November 2023. He noted that the funds will be used to cover the cost of logistics, staffing, and other essential requirements for the smooth conduct of the elections.
In addition, the federal government has allocated N5.5 billion to fund the establishment of the student loans board, as well as N8 billion for the initial funding of new ministries. The government has also provided N200 billion as capital supplementation to address urgent requests for funding made by various parts of the country.
While welcoming the funding allocated to crucial sectors in the supplementary budget, CSL’s research analysts expressed concern about the country’s growing expenditure, which is not commensurate with its revenue generation capacity. The team noted that the government’s reliance on borrowing to finance its operations could lead to a further deterioration of the fiscal situation, given the already high levels of debt.
According to the analysts, with the addition of the supplementary budget, the country’s total budget for 2023 now stands at N28 trillion. They noted that while the country’s fiscal position is expected to improve this year due to expected savings on subsidies, the impact of currency devaluation on foreign exchange (FX) revenue, and the anticipated increase in tax revenue from new taxes introduced in the Finance Act, these gains may be offset by other factors.
These include increased spending on infrastructure, the impact of rising inflation on the cost of government operations, and the need to fund the implementation of the new minimum wage.
The research team advised the government to take action to either significantly reduce its spending or find ways to significantly increase its revenue. They emphasized that unless the government takes decisive action to address the fiscal imbalance, the country’s debt burden will continue to rise, and the economy will suffer.
“We believe more spending will contribute significantly to the country’s growing budget deficit, forcing the country to seek additional borrowing,” they noted.
