2022 budget: Economists charge FG on revenue mobilisation policies, efforts

Given the recurrent trend of budget deficits and unattainable performance indices, some economists have lent to the call for the Federal Government of Nigeria to seek viable means of shoring up revenue and reduce the country’s reliance on non-oil revenue sources or such non-oil revenue sources as excise duties, taxes, etc.

They stated this in a virtual seminar on ‘A reality check of 2022 FGN budget’, organised by the Department of Economics, Faculty of Economics and Management Sciences, University of Ibadan in collaboration with UI Eco Alumni Council.

The lead presenter and Chief Executive Officer, Economic Associates, Dr Ayo Teriba, said the 2022 budget would remain a dream if plans are not put in place to mitigate shortfalls that was the case with previous budgets, especially that of 2021, since the realities of COVID-19 induced global economic slack and little revenue recoveries by the government remain the case.

To achieve this, Dr Teriba said the Federal Government of Nigeria should begin to look at securing non-interest loans to build national assets that would in turn create employment opportunities for Nigerians and aid the growth of the economy.

He maintained that the current trend of borrowing to make-up deficits and not using same to finance capital projects was tantamount to building castles in the air.

“If we cannot coherently deploy a macroeconomic instrument as fundamental as an annual FGN spending plan, then we cannot be expected to hit any of our stability, growth, diversification, poverty reduction and employment policy targets.

“If we cannot fund one year budget, then we cannot be expected to fund a five-year plan that promises to accelerate growth, diversify growth, and sustain development.

“Annual spending plans must be funded in full to ensure that medium term plans do not continue to end up as attempts to build castles in the air,” Dr Teriba said.

Dr Olumuyiwa Adedeji, who is the founder and CEO, 4MNT, USA, in his presentation said the global context and development underlying the design of the 2022 budget might lead to an unrealistic budget performance as such realities like the emergence of new COVID variants, pandemic-induced supply-demand mismatches, sustained price pressures and rising inflation expectations in advanced economies, still persist.

Dr Adedeji said the implication for Nigeria is that “Access to foreign borrowing and global financial conditions have tightened; higher external borrowing costs; and lower-than-envisaged growth, reduced non-oil revenue and higher-than-planned financing.”

He advised that the country’s fiscal policy must be agile and respond flexibly to emerging challenges. This, he said, could be achieved by controlling government expenditures at the preparation stage relative to execution.

Dr Adedeji said “Policy makers could begin to consider expenditure rationalisation and priotisation, ensure social transfers become more targeted, consider the impact on credit to the private sector of higher domestic borrowing, recourse to Central Bank financing should be limited or avoided, given its potential implications for inflation and exchange rate.

“The country actually needs to effectively and efficiently spend more on infrastructure, education and health as such increased spending is critical to higher, sustained and inclusive economic growth,” he said.

The CEO, Preston Consults Limited and a discussant at the seminar, Dr Tochukwu Nwachukwu, noted that with increasing budgetary volume over the years, the government’s recurrent and capital expenditure have remained the same. This, he said, would hurt the economy as the government is not spending on income-yielding assets.

The Head, Department of Economics, University of Ibadan, Prof. Adeola Adenikinju, in his presentation on ‘Budget deficit and structural issues in 2022 FGN budget’, maintained that budget deficits have increased Nigeria’s debt profile and that given the global financial outlook, it may be difficult for the government to access external loans.

Prof Adenikinju said “In the past two years, the deficits have been magnified by COVID-19 and its challenges to domestic and global economies. Budget deficit has been magnified by revenue challenges. The plan by the government to drive revenue-GDP ratio from about seven per cent to 15 per cent by 2025 through various reforms including tax reforms; are the efforts progressive or regressive?”

The seminar, which was moderated by the Dean, Faculty of Economics and Management Science, University of Ibadan, Prof. Omo Aregbenyen, had other economists and policy makers in attendance.

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