2022 budget proposal unrealistic, says economist

A development economist, Dr. Chiwuike Uba, has said that the 2022 budget proposal presented to the joint session of the National Assembly by President Muhammadu Buhari on Thursday, as presently constituted, may be difficult to be implemented by the government.

In a statement made available to the media in Enugu, Uba, who is also the Board Chairman of Amaka Chiwuike-Uba Foundation (ACUF), said that the revenue forecasts and some other budget parameters may be unrealistic, adding that the usual credibility problems of previous budgets are likely to shadow the 2022 budget.

According to him, while the early presentation of the budget is commendable, it is clear that we still have an incremental fiscal structure, regardless of the state of the economy.

“We must reflect and discuss whether we should grow and strengthen the economy. The 2022 budget proposal in its current form may not achieve the budget’s objectives”.

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Uba stretched further the 2021 Budget, which was called the budget of stabilization and economic growth, and has so far been unable to meet up to 30 per cent of the government’s fiscal policy objectives.

Citing the government’s half year report, he said the economy is yet to witness the desired growth outside the GDP growth statistics.  The 2021 budget has so far delivered mixed results. There are some commendable positive results, as well as negative results.

According to the half year budget implementation report, as of June 2021, only 27% which was N1.34 trillion of the money from the total public debt of N4.9 trillion was released to fund capital expenditures (including additional capital expenditures).

This implies that all the revenue of the government and about 73% of the accumulated public debt in the first half of 2021 was used for debt servicing and also to fund recurrent expenditures. The usual expectations are to fund capital projects, especially projects with the ability to repay costs and stimulate economic growth. The future of generations to come is gradually mortgaged, without any demonstrable sustainable commitment to policy to stabilize and grow the economy.

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He added the N10.13 trillion forecasted revenue in 2022 appears to be unrealistic. This finding is based on the analysis of the 2021 half-year results and the revenue parameters for the 2022 revenue budget. First, as of June 2021, actual revenues for the federal government were N2.3 trillion, 43% less than budgetary revenues for the first half of 2021. Neither does it look that the second half of 2021 is a promising one.

Continuing, he said: “The N3.6 Trn’s 2022 budget for debt service is extremely unrealistic. In the first half of 2021, Nigeria’s debt service is already N2.02 trillion, which is more than 21 per cent higher than the budgeted debt service of N1.662trn for the same period. This means that the total debt service payment in 2021 may be in the vicinity of N4.3 trillion”.

Uba said this projection is based primarily on the six-month report and the galloping growth rate of the public debt. Nigeria is accumulating more and more debt in 2021 and plans to finance the 2022 fiscal deficit with additional loans.

Furthermore, the 2022 budget deficit of N6.5 trillion may likely increase by the end of 2022. This, in turn, would impact on the additional debt required to fund the budget. Taking these assumptions into account, N5.0trn would provide a more realistic debt service budget in 2022.