PwC bulletin: Nigeria's 2022 Budget Highlights

Nigeria's President, Muhammadu Buhari presented the 2022 Budget on 7 October 2021, to the Joint Session of the National Assembly.

Highlights

The 2022 budget has a deficit of about N6.25tn, approximately 3.39% of GDP. This is slightly above the 3% ceiling set by the Fiscal responsibility Act 2007 (FRA). However, the president alluded that the expenditure level was necessary to assist with overcoming current security challenges and accelerate post-recession growth. The President insists that Nigeria only has a revenue challenge and not a debt sustainability problem.
The deficit is expected to be financed by new borrowings, privatisation proceeds and drawdown on loans secured for specific projects.
Non-debt recurrent expenditure of N6.83tn is the largest expense item, with 60% relating to personnel costs at N4.11tn.

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This article shares insights on the 2022 Nigerian budget.

Key takeways:

There have been concerns about Nigeria’s rising debt profile especially debt service to revenue ratio as well as foreign exchange liquidity constraints, both of which have been exacerbated by the COVID-19 pandemic.

While some of the revenue generating initiatives in the budget are commendable, a key focus area may be to explore avenues to diversify export revenue sources away from crude oil, which currently accounts for more than 80% of total foreign exchange receipt.

Concerted and coordinated efforts are required to improve the policy environment and address insecurity in order to boost domestic investment and attract foreign direct investments.