2023 Budget Deficit, Major Challenge to Nigerian Economy, Says Expert

Emma Okonji and Nosa Alekhuogie

The CEO, Cowry Asset Management, Mr. Johnson Chukwu has expressed dissatisfaction over the budget deficit in the 2023 Budget that was signed on Tuesday by President Muhammadu Buhari.

According to him, the 2023 budget was about 4.3 per cent deficit of Nigeria’s Gross Domestic Product (GDP), adding that such budget deficit may plunge Nigeria into huge borrowing  capable of creating economic setback for the country.

Chukwu who spoke yesterday on ‘The Morning Show’ on ARISE NEWS Channels, the broadcast arm of THISDAY Newspapers, said Nigeria was already indebted to other countries and that the budget deficit would make Nigeria to continue to borrow in order to service her debts.

Speaking on the implications of the N12.1 trillion budget deficit in the 2023 budget, Chukwu said, it would compel Nigeria to continue to borrow and increase her debt profile.

“Today Ghana is defaulting on both local and international debts and Nigeria should be careful not to toe the line of Ghana in terms of borrowing to service debts. Any country that is borrowing to service debts is in a dead trap that could consume such country and that is where Nigeria is gradually heading to,” Chukwu said.

“Some of the current expenditure of government are discretionary and government can actually do away with such discretionary expenditures in order to save the country from huge borrowing that will be difficult to repay. Some of the expenditures of government do not add any value to the economy and such expenditure should be discarded, Chukwu said.    

According to him, “Government spends so much on capital expenditure, and my worry is that if government has to borrow for every capital expenditure, then it will be economic wise for government to outsource capital expenditure to the private sector.”

He further explained that the government would never manage economic resources better, “because government is not a very efficient user of economic resources,” adding that the private sector was well known to achieve more value for money, when it comes to investments, as against government that has several avenues for financial leakages.

“As at October last year, the federal government had borrowed over N6 trillion from the Central Bank of Nigeria (CBN), which sum up to about N22 trillion that the federal government has borrowed from CBN alone in the past couple of years. President Buhari has made it open that the cost of servicing the CBN loan is about N1.8 trillion.

“This is an internal debt alone and the international debts are also there. So there should be checks and balancing to checkmate the way and manner that the federal government is involved in local and international borrowing,” Chukwu said.  

He blamed the three arms of government, the executive, the legislative and the judiciary, for not putting enough checks and balancing in place that will guide government excessive borrowing.

Reacting to President Muhammadu Buhari’s refusal to assent the Finance Bill into law, Chukwu said it was not even right in the first place for Buhari to sign the 2023 Budget, without signing the Finance Bill, which he said should have been the document that would guide discussions about the budget before it is even signed by Buhari.