2 minutes summary of Buhari's spending plan for 2023

On Oil subsidy: President Muhammadu Buhari, in his budget presentation to lawmakers on Friday, October 07, 2022, noted that one of his major plans is to remove the costly oil subsidy that is draining state finances.

The government spent ₦1.59 trillion on fuel subsidies in the 6 months through June this year but plans to scrap it in 2023, Buhari said. “Its current fiscal impact has clearly shown that the policy is unsustainable,” he said.

What Nigeria will spend next year: Despite the hands-off subsidy, Nigeria's spending is projected to increase by 18% next year at ₦20.5 trillion ($47 billion).

According to the president , his budget will help drive economic growth, with a 3.75% expansion in gross domestic product forecast for 2023.

The budget deficit: The budget deficit is forecast at ₦10.78 trillion or 4.78% of GDP, exceeding a legal threshold of 3% stipulated in Nigeria’s fiscal responsibility law.

Recall, the Budget Office of the Federation, in August 2022, projected that the fiscal deficit could rise to as much as ₦12.4 trillion in 2023, nearly three times total revenue, or 5.5% of GDP, if the government continues to subsidize fuel. Subsidy payments are expected to cost ₦6.72 trillion next year.

What you should know: The Nigerian government is known for falling short of its growth, revenue and deficit targets. This will likely be the case for Buhari’s budget as well.

“Revenue shortfalls remain the greatest threat to Nigeria’s fiscal viability,” the president, himself, said. 

However, Buhari's budget might be supplemented by the incoming administration of the candidate that wins February’s presidential elections to replace him.

Nigeria expects an increase in revenue: Buhari said the administration expects to raise ₦16.87 trillion in revenue, ₦1.9 trillion of which will be generated from crude sales and taxes.

The budget assumed an oil price of $70 a barrel, an exchange rate of ₦435.57, and that the country will pump an average of 1.69 million barrels a day, compared to 1.16 million barrels daily in September, 2022. 

How much Nigeria wants to borrow to achieve its goals: To plug the funding gap, Buhari plans to borrow as much as ₦8.8 trillion from domestic and foreign lenders. That’s 76% more than the ₦5 trillion approved for this year.