Special federal projects to rise 68% in cost in 4 years
By Jeph Ajobaju, Chief Copy Editor
Federal spending on special projects to stimulate economic growth is projected to rise 68.1 per cent from N4.58 trillion in 2021 to N7.7 trillion by 2025, funded by sovereign guarantees in Public-Private Partnership (PPP).
Among the projects are:
- Federal Capital Development Authority’s Katampe Infrastructure Project
- Nigeria Ports Authority’s Lekki Deep Seaport
- Nigerian Export-Import (NEXIM) Bank export drive
- Payment Assurance Facility for Nigeria Bulk Electricity Trading Plc
- Power Sector Contingent Liabilities Put-Call Option Agreement (PCOA)
- Power Sector Contingent Liabilities – Partial Risk Guarantees (PRG)
- Legacy FGN Exposure from PHCN Successor Companies
- Ajaokuta–Kaduna–Kano (AKK) Gas Project
The Budget Office disclosed this in its Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) 2023-2025 (MTEF-FSP 2023-2025).
“Given the fiscal constraint faced by the Government and the need to address the infrastructure deficit in the country to engender economic growth and development, the Federal Government of Nigeria (FGN) will continue to use Sovereign Guarantees subject to receipt of required approvals and other forms of off-balance sheet products to support the private sector operators involved in infrastructure development, under the Public-Private Partnership (PPP) arrangements,” the document said.
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Mitigating risks
“These Sovereign Guarantees will constitute explicit Contingent Liabilities,” the document added, per reporting by Vanguard.
“The Sovereign Guarantees will be monitored and managed to ensure that the inherent risks from these projects are mitigated and the Guarantees do not crystalise.”
Contingent Liabilities of Government rose to N4.58 trillion in 2021, an increase on N4.18 trillion in 2020.
Focus on revenue generation
The MTEF-FSP 2023-2025 also focus on non-oil revenue sources, prompting higher expectations from revenue collection agencies such as the Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), among others.
Nigeria plans to borrow N11 trillion to fund the 2023 budget in addition to selling some national assets.
Finance Minister Zainab Ahmed, who disclosed this, said budget deficit expected to exceed N12.42 trillion is retained in the entire 2023 fiscal cycle.
She made the point when she appeared before the House of Representatives Committee on Finance to defend the MTEF-FSP 2023-2025.
She explained to the lawmakers two scenarios of the budget deficit.
In one, Ahmed said, the deficit is projected to be N12.41 trillion, up from N7.35 trillion budgeted in 2022, representing 196 per cent of total revenue or 5.50 per cent of estimated Gross Domestic Produce (GDP).
In this option, she added, the government would spend N6.72 trillion on subsidy.