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HomeTop NewsBuhari seeks parliament's approval for 2022 budget amendment; hikes deficit to N7.35...

Buhari seeks parliament’s approval for 2022 budget amendment; hikes deficit to N7.35 trln, to borrow more

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President Muhammadu Buhari is seeking the National Assembly’s approval to amend the 2022 fiscal policy to include new borrowing as he projects that the budget deficit will hit N7.35 trillion, N965.42 billion more than the initial projection in this year’s budget.

“Total budget deficit is projected to increase by N965.42 billion to N7.35 trillion, representing 3.99 per cent of the GDP. The incremental deficit will be financed by new borrowings from the domestic market.

“Given the urgency of the request for revision of the 2022 Fiscal Framework and the 2022 budget amendments, I seek the cooperation of the National Assembly for expeditious legislative action on this request,” President Buhari said in his letter to the National Assembly.

In a letter to the House of Representatives, which was read by the Speaker of the house, Femi Gbajabiamila, the President said the Federal Government would borrow funds to fill the budget gap.

The President attributed his request for budget amendment to new developments both in the global economy as well as in the domestic economy, which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 budget was based.

“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.

The decision to suspend the removal of the Premium Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues.

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“There is also the need to make adequate provisions for the recent enhancements of allowances for officers and men of the Nigeria Police Force to boost their morale as they grapple with heightened security challenges in the country.

“Following these developments, it has become necessary to adjust the fiscal framework and accordingly amend the 2022 Appropriation Act to ensure its successful implementation,” the president said in his letter.

The President said the adjustments to the 2022 Fiscal Framework include an increase in the projected oil price benchmark by $11 per barrel, from $62 per barrel to $73 per barrel; a reduction in the projected oil production volume by 283,000 barrels per day, from 1.883 million barrels per day to 1.600 million barrels per day; an increase in the estimated provision for PMS subsidy for 2022 by N3.557xtrillion, from N442.72 billion to N4 trillion.

Other adjustments include an N200 billion cut in the provision for federally-funded upstream projects being implemented, from N352.80 billion to N152.80 billion; an increase in the projection for Federal Government independent revenue by N400 billion; and an additional provision of N182.45 billion to cater for the needs of the Nigeria Police Force.

The letter partly read, “Based on the above adjustments, the Federation Account (main pool) revenue for the three tiers of government is projected to decline by N2.418 trillion, while FGN‘s share from the account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173 trillion.

“However, the amount available to fund the FGN Budget is projected to decline by N772.91 billion due to the increase in the projection for independent revenue (Operating Surplus Remittance) by N400bn.

“Aggregate expenditure is projected to increase by N192.52 billion, due to an increase in personnel cost by N161.40 billion and other service wide votes by N21.05 billion (both for the Nigeria Police Force), additional domestic debt service provision of N76.13bn, and net reductions in statutory transfers by N66.07 billion.”

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