The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
The Federal Government has been urged to take another look at expanding the nations’ revenue base to ensure budget sustainability and less borrowing.
Economist and consultant, Dr Biodun Adedipe made this call while analysing the 2023 Appropriation Bill presented to the National Assembly by President Muhammadu Buhari on Friday.
Dr Adedipe who spoke to TVC News’s Tolulope Ogunjobi, on the Business Nigeria show on TVC News said the main issue with the 2023 Budget that is apparent to a discerning observer is the level of borrowing to finance spending.
He added that the big elephant in the room of Debt Repayment also needs to be addressed but said it is not too bad but must be addressed going forward.
He said the decision to increase the MPR will also be pivotal as it has the capacity to increase production Costs through financing for manufacturers which will ultimately be passed to the consumers.
On increasing Revenue, he said the Tax Net needs to be widened through the use of incentives that will ensure that people pay.
He also said that those who are underpaying and not paying at all also need to be brought under the Tax umbrella to ensure that the nation has more revenue to help finance National Development.
Read Excerpts Below…
“By saying that the budget is appropriately titled from those two heads, consolidation with Base. As the President mentioned, this is the last budget he will implement in office. That means the first essence is to consolidate on what has been done in the preceding seven years to the year of the budget. Then secondly, the fact that the employers will make the transition to a new administration, a new government appropriately so. Now the key issue for us is we go back to ask ourselves what a budget really is.
Simply a plan, intended spend and an expected revenue so that way it’s normally approved. So what do you want to spend on and why? That’s a primary question. Then, in terms of allocating the funds available, you will also be asking what is the relative importance of those expenditure? Before you talk about the volume, the value, the rates of both and the rest of them. Then the other side to it is expected revenue. How much do you expect from where do you expect it? What are the drivers of that revenue? So why can’t we have more of the revenue? Or is there a possibility that we might even have less? So these are usually questions that we ask in looking at the framework of a budget.
Now, as rightly mentioned, we have a budget of 20.51 Trillion Naira. And that of course comes from the proposed, or let me call it intended spend plan for 2023, as you mentioned. Also one major head is capital seeking funds, debt service, recurring non debt, and of course, tax transfers. Now, the first question to ask in interrogating, this is the allocation to those major headings.
Now, for me, we have history of not only the last seven years of this administration, we have history of the Nigerian economy. So what we see today is a reflection of the choices, decisions and actions that we took yesterday. The body announced, OK, this is what we expect next year. We are now making plans to say these are the things we want to do for the polarizing.
So that also tells us if we execute this project, where we are likely to find ourselves. So these are issues we want to interrogate. So now it makes in a sense that for us the first thing we observe here is debt service is very clear here, accounting for 30%.
We find our history also in what we have to do in the last several years and even before then, how our sovereign debt has been growing. Again, two critical things. We ask that we also guide our further integration of the point that when the national service begins to look at the numbers and the drivers of the numbers and that is why we do borrow so much. I still need to borrow much. What kind of borrowing are we looking at before we begin to talk about first indications? So why we need to borrow is very simple and straightforward economics. One where we call it insufficient revenue.
We are not getting enough revenue. That’s why we have to borrow. That’s why now if we have to borrow, for what purpose? Again, Facebook economics, we say you don’t borrow to consume, you borrow to develop capacity to be able to repay the loan in the future and service the obligation of the derivative of the loans. So that becomes also an issue that will be looking at in interrogation, the numbers.
And then of course, we now come to one big issue here. But the largest figure among the five expeditor held is actually the current non debt where you take out what will go as a smaller that is 4.9 trillion. That’s like a quarter of the entire spend for that amount at 24.3% of the tablet, which means we have a big public service. Public service. All of this comes in the personnel budget, which means that is an area we need to also interrogate going forward. What are we going to do there? All right, incidentally, in that budget statement, rather be reference to the Onsite report, there’s a white paper.
We want to implement what comes up as recommendations fitness between these governments and the incoming 1 second half of 2023. We want to see some recommendations in our white paper implemented because that ultimately will also impact snap costs as you see in this budget. Now, of course, we come to a small number seeking for stability, transparency.
What perhaps is also very important to note here is when you switch to the revenue side, there is a very big message there that the bulk of the revenue we are looking at is significantly less than the expenditure plan. But you find that the bulk of that revenue is coming from non ecosystem. Okay? That means you are looking at 7.81 trillion or 80% of the projected revenue coming from non resources oil accounting for only 1.92 trillion% oil for this.
Now we begin to talk the issues that I want to interrogate and see how these budgets can be improved when we get to execution. For me, that is the essence of this conversation assumption. While price $70 per barrel, that’s okay.
rom the data available and the realities of the market and expectations for 2023 that is not an issue to worry about. The production figure in that budget one six, $9 million per day, which includes also condenses of 3000 to 4000 per day. With me the ultra oil production is between 1.29 and 1.39 milligrams per day. So against our production capacity of over 2 million and against our open plus allocation it is much higher than that. That shows that there is a gap in there that is not coming into the podcast. Obviously for the reason of leakages. That is a major thing that pay attention to in person three.
So that will help us in terms of execution of this budget. The final comment before if you have any specific questions for me to answer is the deficit implied in this budget 578 trillion narrow or 478 percent of our GDP? OK, fiscal Ecology Act puts a limit of 3%. And again that also allows government to do opposite, greater than 3% if it becomes expedient.
All right? That means if you have a situation of quote unquote crisis at hand that requires government to spend more than it would normally have done in a normal situation and environment and that is happening. So now let me make a point here. There’s nothing wrong with borrowing. Like I said earlier, what you do with the borrowed money is one and then if you have a deficit in your podget, are you financing? The budget is also clear on that. 8.8 trillionaire will be borrowed and from the interpretation that means from commercial sources, whether domestic or foreign, but it will also be drawn down from bilateral and multilateral loans for projects and programs.
I don’t have any problem with that because they are usually very cheap, often times 1%. Random interest rates usually less than 2% ten are also very long. So that is not a problem. The real problem is the commercial loans and that’s the one we need to further interrogate. Of course, privatization proceeds, which is for me is significant, all of these are expected to be in government plans to finance deficits from new borrowing, privatization proceeds and narrow drawdowns and all of this I’m worried also along that line, but you also identified non oil space as doing pretty well at this time.
Can we really follow up with this also the 31 questions also we see what is happening and what NNPC is doing with regards to Oil theft at the moment, which is killing, eating bad into the fabric of the economy.
Now, do you see a headway along all of this? I’m worried about revenue one way or the other. That really is the major problem of not only fiscal operations, but of the Nigerian economy. Because what we have really is not a problem with borrowing, from my own perspective, because when you look at what we have borrowed mostly for in the last couple of years, they have been mostly for projects until recently when the revenue problem got red, we now have to borrow to fund the current expenditure.
Okay, so that now really is like right. We said that is what we must begin to look at, the entire possibility of expanding the pockets of non oil revenue. Of course, let me say it’s a huge debate when you talk about tax revenue. Tax revenue, that has about one of the lowest in the world. Okay, we talked about that. Quite all right. But then the argument on the other hand is, hey, in a very tough and challenging business environment, we are also the standard of living is quite generous. Do you want to now raise the tax rate? We say, no, don’t raise the tax rate.
We can expand the taxpayers. It’s by now seeking to bring it to that basket. Those who are not in there, on the one hand. Secondly, those who are also evaded in the form of either evasion as the quality which is illegal, or they also underpay, which means we can still expand nonreal revenue if we truly look at the avenues to reach leakages. Of course. And one of the great ways of doing that, and we have covered this over many years, is whatever you want people to do, put an incentive there. So if you want people to pay tax, put an incentive. Incentive is not about giving them money. It’s about, look, you have some services in government to require you can’t access those services unless we see evidence of proof that you pay tax”.
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