The Central Bank of Nigeria provided data that showed the Federal Government had a budget deficit of N7.34 trillion between January 2022 and November 2022.
This information was provided by the CBN in a statement that Mike Obadan, a member of the Monetary Policy Committee, presented at the most recent MPC meeting in January.
Speaking about the government’s financial operations, he said, “These continue to arouse serious concerns in light of the growing yearly fiscal deficits and their implications for public debt accumulation (N44.06 trillion as of September 2022 and excluding nearly N23.0 trillion in Ways and Means Advances) and inflation in light of the Ways and Means Advances financing.
“From January to November 2022, the Federal Government incurred a fiscal deficit of N7.34tn. The projected Federal Government fiscal deficit for 2023 is N11.34tn and it is to be partially financed through deficit financing. This is where the challenge lies for inflation control.”
He claimed that in 2022, the Nigerian economy would face significant challenges, as evidenced by the country’s weakening growth performance, high and rising inflation, pressure on the foreign exchange market and a weakening currency, soaring fiscal deficits and public debt, and an expanding money supply, among other factors.
He said that spillovers from the big economies had continued to have an effect on the country’s macroeconomic performance, including tightening financial conditions, high inflation, supply chain disruptions, and geopolitical concerns.
“The fiscal sector issues persist and may possibly get worse in 2023 with rising debt levels and predicted deficit situation,” says Robert Asogwa, a member of the MPC. The whole debt stock remained extremely high in 2022 as a result of the large government spending and low revenue levels.
The overall burden of debt repayment and servicing now becomes serious given the potential addition of current ways and mean advances to the total debt stock. The expectations of any fiscal ease in 2023 may be improbable given the anticipated fiscal deficit of N11.34 trillion in the 2023 budget, which is higher than the estimated overall income of N10.49 trillion.