Director General of the Debt Management Office (DMO), Ms. Patience Oniha, revealed that the Federal Government of Nigeria would have N77 trillion debt at the end of President Munhammadu Buhari’s tenure which would be inherited by the incoming administration. Recently, there was an approval of N819.5 billion by the National Assembly as supplementary budget for 2022. Another letter also revealed the president informing the lawmakers that the government would take extra N1 trillion from the Central Bank of Nigeria (CBN) through Ways and Means.
According to Oniha, the federal government’s ways of getting the loans through Ways and Means from the central bank would scale up the debt to roughly N77 trillion as the N1 trillion would increase the overall Ways and Means Advances from the CBN to N23 trillion which would be converted to bonds by the government. Despite the data given by the DMO, which says Nigeria’s public debt was at N44.06 trillion as at third quarter of 2022, the federal government plans on more borrowing for financing 2022 supplementary budget and the 2023 budget.
FG would phase out Pioneer Tax Incentives for mature industries.
The Minister of Finance for Budget and National Planning, Zainab Ahmed, asserted that there would be a reduction to about nine percent in the current interest on the borrowed money when the Ways and Means receives legislative support; this would also extend the repayment period to 40 years. The Ways and Means is currently running interest rates which is averaging 18.5 percent. Without the approval, the interest accrues with an additional N1.8 trillion or N2.2 trillion to the Ways and Means.
He also stated the federal government’s loss of N6 trillion to many kinds of tax incentives and waivers in 2021. With this, she affirmed that the federal government would stop the Integrated Corporate Income Tax, also known as Pioneer Tax Incentives, for industries that developed in the 2023 Appropriation Act. The president, on January 3, 2023, signed the 2023 appropriation bill of N21.83 trillion into law, deferring the giving of assent to the Finance Bill 2022 which was still under review, particularly for its conflicts with the fiscal term of the Petroleum Industry Act (PIA).
2023 projections veers as gov’t adjusts to current economic realities.
Ahmed added that the omission of Integrated Corporate Income Tax incentives is for mature industries. There are tax provisions that are dated around 1958 and there are industries that were considered as infant during the period which have grown and are required to exit. The need for mature industries to exit the Pioneer Tax Incentives is so that new infant industries can benefit. These infant industries include industries that are developing in the IT sector that did not exist and should benefit from these opportunities.
As explained by the minister, estimations veered from the National Development Plan of 2021-2025. The minister said the reason for this deviation is because there had to be an adjustment by the government to the current economic realities and the modified medium term outlook. For instance, the real GDP was projected to be 3.75 percent, compared to 4.37 percent projected in the Medium Development Plan by the government. Also, growth was projected to moderate to 3.3 percent in 2024 before it rose up to 3.46 percent in 2025.
Petroleum subsidy remains until middle of 2023.
The projected fiscal outcomes in the 2023 budget relies in the 2023 framework of petroleum subsidy reform ratio. The 2023 budget framework will see petroleum subsidy remain till the middle of 2023, according to the approval of National Assembly and based on the announcement of an 18-month extension early in 2022. To enforce this, provision for PMS subsidy is only N3.36 trillion. The minister also emphasized stricter enforcement of the performance management framework for Government-Owned Enterprises (GOEs) for increment in operating dividend remittances in 2023.