Nigeria proposes ₦19.8trn budget for 2023

The Nigerian government has proposed a budget of 19.8 trillion naira for the 2023 financial year, representing a 15.4% increase from the 2022 budget. This budget also includes a projected deficit of 11.3 trillion naira, which is a significant 54% jump from the estimated deficit in the 2022 budget. Steve Osho, Co-Managing Partner at Commercial Partners, shared his insights on this proposed budget in an interview with CNBC Africa. Osho expressed concerns about the escalating deficit and the ongoing reliance on borrowing to fund government operations. In his view, the government needs to focus on revenue generation and fiscal discipline to address the growing debt burden. He highlighted key points from the budget, including the budget assumptions, the borrowing outlook, and the implications for debt servicing. The budget assumptions for 2023 include an oil price of $70 per barrel, an exchange rate of 435 naira to the dollar, and oil production at 1.6 million barrels per day. Osho noted that while the oil production target is achievable, the exchange rate projection may need adjustments given the current market realities. He emphasized the need for a coherent exchange rate policy to stabilize the currency and minimize market distortions. Additionally, Osho raised concerns about the GDP growth target of 3.5%, suggesting that higher growth rates are essential for Nigeria's economic development. On the topic of debt and borrowing, Osho expressed worries about the increasing debt-to-GDP ratio and the higher borrowing costs anticipated in the global markets. He cautioned that the government's borrowing plans could strain the economy and lead to escalating debt servicing costs. Osho also addressed the finance minister's statement on debt servicing, where she mentioned that 60% of revenue would be allocated to debt payments. While the minister exuded confidence in the government's ability to service its debt obligations, Osho stressed the importance of sustainable revenue generation to avoid future financial challenges. In conclusion, Osho emphasized the need for proactive measures to boost revenue, reduce reliance on borrowing, and promote prudent fiscal management. He urged the government to prioritize economic growth and stability to navigate the challenging financial landscape effectively.