The Federal Executive Council (FEC) has approved the supplementary budget of N2.18 trillion for the year 2023 to fund “urgent issues”. The council granted the approval on Monday during its weekly meeting presided over by President Bola Tinubu. This announcement was made by Senator Abubakar Bagudu, the Minister of Budget and Economic Planning following the FEC meeting in Abuja. The minister stated that the funds are needed to sustain and accelerate the gains made in security and agriculture and allocations will be made for both purposes.
The budget will cover four months of wage awards for Federal Government workers with the sum of N210 billion provided for the payment of wage awards as negotiated with the Nigeria Labour Congress. Recall that the Federal Government had agreed to pay N35,000 each to about 1.5 million employees of the Federal Government for September, October, November, and December 2023. This amounts to approximately N210 billion, which has been approved. Cash transfers to the tune of N400 billion was also approved. The Federal Government obtained a US$800 million loan from the World Bank to disburse N25,000 cash transfers to 15 million households. The minister stated that the US$800 million is for two months October and November and an additional N100 million was approved for December.
According to the minister, out of the total supplementary budget, the Federal Government approved N18 billion for the Independent National Electoral Commission (INEC) to conduct the Bayelsa, Imo, and Kogi State off-cycle elections next month. Also, about N5.5 billion was provided for the funding of the takeoff of the student loans board as well as N8 billion for the take-off grant of new ministries. A sum of N200 billion was also provided as capital supplementation to deal with urgent requests that have been made to the President from various parts of the country.
We remain concerned about the country’s increasing expenditure amidst significantly low revenue generation capacity. The supplementary budget will worsen an already precarious fiscal situation in our view. With the supplementary budget, we estimate the country’s total budget for 2023 comes to c.N28 trillion. Though we believe the fiscal position will likely improve this year, owing to expected savings on subsidies, the impact of currency devaluation on FX revenue, and expectations of growth in tax revenue from new taxes introduced in the new Finance Act, we still believe the government needs to either cut down expenditure significantly or find ways to significantly boost revenue. We believe more spending will contribute significantly to the country’s growing budget deficit, forcing the country to seek additional borrowing. The nation’s debt had climbed to N87.38tn as of 30 June 2023, bringing the debt-service-to-GDP ratio to c.43.2% based on 2022 GDP at current market price.
