In Sowore’s speech at the ICAN conference this week, he made an important observation that struck me.
He said that the 2023 budget is an illegality that should never have stood. I found myself agreeing with him.
The budget presented was ₦20 trillion. A budget is a plan for how much money a government expects to make and spend in a specific period of time.
With this background information, you now understand that for 2023, Nigeria expects to spend ₦20 trillion. This figure is the largest in Nigeria’s history.
A person new to the way the Buhari government works would instantly assume that we plan to spend this amount because that is how much we expect to generate in revenue. Or at worse, we expect to generate most of it.
You would be wrong.
The total revenue Nigeria expects to generate (through oil, taxes, etc.) is projected to be ₦9.73 trillion.
The remaining ₦10.78 trillion? The government wants to borrow it. That’s what economists call a deficit. That would be the largest deficit the country has ever had.
And that’s what Sowore was referring to.
According to the constitution, we should not be borrowing that much to fund our budget because it represents 4.78% of the nation’s GDP.
(GDP is the total value of all goods and services that take place in a country in a year).
That 4.78% is a violation of the constitution. According to the Fiscal Responsibility Act of 2007, at no point should the deficit be higher 3% of the GDP.
The government has not only been violating the Fiscal Responsibility Act, but it has also been violating the CBN Act too.
The Act mandates the CBN not to loan to the government more than 5% of the revenue generated by the government in the previous year. Last I checked, it had exceeded the limit by 69%.
Well, the deficit will be much worse when the implementation starts.
Currently, Nigeria’s total debt stands at ₦42 trillion. It was ₦12 trillion in June 2015 when GEJ handed over. If we add ₦10 trillion to it, our total debt is expected to exceed ₦53 trillion.
That’s not the worst part.
When the government says it would generate revenue of ₦10, you can be sure that they would not generate more than ₦6. In other words, the average revenue performance is 60%. It’s been like this every year since 2016.
And as usual, the government will borrow the remaining 40%.
That’s the APC government for you; a government that borrows with no regard for the law or the future.