Debating FG’s 2023-2025 Medium Term Expenditure Framework

Udora Orizu writes that the House of Representatives has commenced interaction with ministers, heads of revenue generating agencies of government to defend the revenue estimates outlined by President Muhammadu Buhari in the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP)

To achieve early passage of the budget and open up more revenue sources to finance the country’s budget for 2023 fiscal year, members of the House of Representatives last week commenced an interactive session on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), in Abuja with ministers and various heads of revenue generating agencies of government.

The Federal Executive Council (FEC) had on July 27, 2022, approved the 2023-2025 MTEF/FSP.  Minister of finance, budget and national planning, Zainab Ahmed, said the ministry got inputs from the Council and will make the necessary adjustments for onward presentation to the national assembly.

Before the federal lawmakers embarked on their two months annual vacation, the principal officers in both chambers of the National Assembly, had referred the document to the Committees on Finance to consider while they are on break, to enable the Executive commence work on the 2023 Appropriations Bill. Its timely passage would facilitate the early preparation of the budget based on approved parameters by both chambers.

While the Senate is yet to begin debate on the document, the House on August 29, started theirs by engaging the finance minister, Ahmed.

At the interactive session, the Committee Chairman, Hon. James Faleke, said the current financial situation in the country requires that all revenue sources explored as the government was short of revenue.

According to him, it was obvious that when there is no revenue, every aspect of the country suffers and asked all agencies appearing before the committee to provide the committee the correct position of their revenue.

He warned that no agency of government will be allowed to play with revenue of the country.

Making her presentation, Ahmed said the federal government was proposing an aggregate expenditure of N19.76 trillion for the 2023 fiscal year. She, however, said she may not be able to make provision for treasury funded capital projects next year.

According to her,  budget deficit for the 2023 fiscal year may run between N11.30 trillion to N12.41 trillion depending on the choice that will be made by the federal government on the issue of fuel subsidy payment.

She stated that the government is projecting a total revenue of N8.46 trillion, out of which N1.9 trillion is expected to come from oil-related sources while the remaining balance is to come from non-oil sources.

Ahmed explained that crude oil price is pegged at $70 per barrel at the exchange rate of N435.57 per dollar, oil production is put at 1.69 million barrel per day, real Gross Domestic Product (GDP) growth is projected at 3.7% while inflation is put at 17.16% in 2023.

She said that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for it in next financial year.

The Minister further said Nigeria has been able to consistently without fail, service her debt and the country do not have any projections even in the near future, to fail in that obligation.

“The budget deficit is projected to be N11.30 trillion in 2023, up from N7.35 trillion in 2022. This represents 5.01% of the estimated GDP above the 3% threshold stipulated in the Fiscal Responsibility Act (FRA), 2007. This deficit level assumes that petrol subsidy reform will be implemented from mid-2023 in line with the timeline for suspension thereof. The draft 2023-2025 MTEF/FSP has been prepared against the backdrop of continuing global challenges occasioned by lingering Covid-19 pandemic effects, as well as higher food and fuel prices due to the war in Ukraine. Overall, fiscal risks are somewhat elevated, following weaker-than-expected domestic economic performance and structural issues in the domestic economy,” the minister added

Same day, the House members accused the office of the Accountant General of the Federation of failure to adequately track revenue generated by agencies of government and to keep adequate records of such revenue.

Committee Chairman, Faleke, had asked Director, Federation Account in the office of the AGF to give the committee up to date records of revenue remittances by the Federal Road Safety Commission, but the Director said they needed more time to provide the records.

Addressing the lawmakers, the Acting Corp Marshal, Federal Roads Safety Commission, Dauda Biu, had said it remitted over N2 billion to the Federations Account in 2021.

However, the records of the Accountant General provided to the Committee was reading about N1.6 billion.

Faleke, while expressing disappointment with the response from the AGF office said, “we are not happy with the accountant general’s office at all. Your data is what we thought we could rely on to do our job. The agencies are here, ready to make their presentation. I don’t have the records to compare with. You don’t have the records and you are telling me that receipts are issued to various offices across the country. It should be automated. You heard the presentation from the Minister of Finance, N11.3 trillion deficit.

“So, if we are able to get our revenue from the agencies, the deficit will reduce. We have so many agencies that you ought to be taking the money automatically, online. We can’t continue with this being because the Accountant General is unable to provide us with requirements. You issue them receipts which could be fake anyway. How can you still be writing treasury receipt by hand at this time and age? It is very disappointing. We have other work to do and we are supposed to finish the work before the presentation of budget which is coming up in September or early October.”

At its next sitting, the lawmakers again expressed displeasure with the Accountant General for failing to provide records of revenue remittances by agencies of government. The House Committee was particularly disappointed with the discrepancies noticed in the revenue remittances of the National oil Spill Detection and Response Agency (NOSDRA) and Energy Commission of Nigeria.

While NOSDRA said it remitted over N2.4 billion to the CRF in 2021, the records of the AGF revealed that the agency remitted about N1.6 billion, while ascribing about N27.82 million to Energy Commission of Nigeria which said they remitted N13.6 million to the CRF.

Meanwhile, the Director General of Debt Management Office, Patience Oniha, in her presentation said Nigeria’s debt profile as of March 2022 stood at N41.60 trillion.

According to her, as at December, 2020, the debt stock stood at 32.92 per cent and rose to 39.55 percent as at 31st December, 2021.

She blamed the growing debt on low revenue generation and remittances as well as annual deficit budget by the Federal Government.

Her words: “as at December 2020, the debt stock of Nigeria which includes the federal government, state governments and the federal capital territory was N32.92 trillion. By December 2021, it was N39.556 trillion. As at March of this year, it was N41.6triilion. On the average, Federal Government debt stood at about 85 percent of the total. Technically, the bulk of our debt is owed by the federal government.

“Debt has grown and that has come from the annual budget. There are three levels where those borrowings have increased. We have been running deficit budget for many, many years.”

However, the MTEF presentation was stalled as several agencies of the Federal Government ignored the summon by the House. Agencies that were scheduled to appear before the lawmakers since the sitting started last Monday have shunned the summon, while those that showed up failed to present the required documents.

Some of the agencies that have failed to appear before the Committee include Nigeria Immigration Service, Nigeria Police Trust Fund and Nigeria College of Aviation Technology. NNPC Limited, Nigeria Liquefied Natural Gas, Oil and Gas Free Zone, Federal Ministry of Power, Nigeria Electricity Regulatory Commission, Nigeria Bulk Electricity Trading.

Others are Nigerian Content Development & Monitoring Board, Niger Delta Power Holding Company, Nigeria Electricity Management Services Agency, Transmission Company of Nigeria, Galaxy Backbone PLC, Nigerian Electricity Liability Management Company, Nigeria Export Import Bank, Nigeria Port Authority and Nigeria Shippers Council.

Out of 12 agencies that were scheduled to appear before the committee last Wednesday, only four showed up, but were turned back for improper preparation.

The Committee particularly refused to take the submission of the NEPZA for what it described as disjointed and unorganized presentation and asked them to go and repackage the document and reappear before them on Tuesday.

Deputy Chairman of the Committee on Finance, Hon. Saidu Abdullahi, who presided over the session said the National Assembly will not accept agencies of government ignoring invitations to them to come and tell Nigerians what they have done with revenue at their disposal and what they are bringing to the table in terms of revenue generation.

While noting that the responsibility of making the country work rest on the National Assembly and the Executive, he said they are not getting what they expected from the agencies.

The deliberation on the document is expected to end Thursday, September 8th, if the key agencies honour the house summons, else their refusal to show up may stall 2023 budget preparation.