The first salvo came from the former minister of Education and World Bank Vice president, Oby Ezekwesili who in a Twitter post described the budget as ‘HOPELESS’
According to her: “This is summary of the HOPELESS Budget @MBuhari signed into law yesterday”
“The Total Expenditure is N21.83 trillion! The Total Revenue is N9.73 trillion!”
She said that the budget has a deficit larger than revenue by almost N12.00 trillion, which is tragic.
“You all better get your PVCs ready because….”
She stated further that no precedent or guarantees revenue will be achieved, but expenditure will be exceeded significantly.
Also, reacting to the budget, the Chief Executive Officer of Cowries Asset Management, Johnson Chukwu on Arise Television Programm on Wednesday, said, if you look at the benchmarks, one of the things you look at is the benchmark for crude oil production which is put at 1.6 million barrels per day, then you look at crude oil price benchmark of about $75 per barrel.
He said starting from the crude oil assumption, crude oil price at $75 per barrel is feasible, given the current global economic environment that china is reopening its lockdown as a result of Covid, it is therefore expected that demand for energy would increase further.
He said we are still dealing with the war between Russia and Ukraine, coupled with the crude oil cap for Russian sea-bound crude by the European nations, these factors would ensure that crude oil price remains celebrated in this current year
But the problem would be the crude volume: “The best we have seen is that the Nigerian National Petroleum Company Limited (NNPC) and other government agencies said the crude production has gone to about 1.1 million or 1.3 million barrels per day.”
“For you to be talking about 1.6 million barrels per day, average, for me, it is very optimistic.”
He, however, said he did not see the measures taken by the government that would lead to an increase to more than 60 percent of the crude oil production over the entire year. Because, when you talk of a crude production volume benchmark, you are talking of daily production. “What this means is that even if you have shut–in, subsequent productions will make up for that shut–in. But I don’t think this is feasible.
So what we may end up with is that we may have budget expectations that we would meet the budget price, but in terms of Volume we are going to have negative volume variance. This is as it relates to the crude oil price.
The other elements of government revenue, independent sources, taxes, and others, I also think, are too optimistic.
Granted that revenue has remained strong in the past in past two years, but even at that, a further increment from those sources may not be feasible, because, beyond the financial services that have shown good performance in the third quarter of this year and last year, other sectors may struggle, he said.
He said if one looks at the last quarter’s GDP one will discover that the manufacturing sector has begun to struggle because of the increase in the cost of doing business as a result of the increase in the cost of funding.
So in terms of tax revenue, the government may be over budgeting when it expects that it is going to achieve the current projected tax revenue.
But, all in all, the government has never achieved its projected tax revenue budget in the last five years, and it continues to increase it, believing that increasing it only gives us the incentives to increase the expenditure which has been increased to about N21.8 trillion and we end up with increasing budget deficit which is putting a lot of pressure on our debt services because we are ballooning our national debt.