The 2022 budget deficit as a percentage of the GDP is 3.46% which exceeds the 3% benchmark set by the Fiscal Responsibility Act.
The 2022 budget has a deficit of N6.39 trillion and a projected nominal GDP for the year of N180.38 trillion. This results in a deficit percentage to GDP of 3.46%.
Nigeria’s deficit as a percentage of GDP has exceeded the 3% benchmark the last three years. The highest was in 2021 at 3.67% including the supplementary budget. That of 2020 was 3.03%.
The Chairman of Fiscal Responsibility Commission (FRC), Mr Victor Muruako accepted that the budget deficit exceeded the benchmark. However, he explained that the government is still within the stipulated deficit framework.
Mr Muruako said that the exceptions stated to allow the government’s deficit to exceed 3% of the GDP quoting Section 61 of the 2020 Finance Act. The act made provision for government aggregate expenditure to exceed the projected benchmark in situations of crises, war, and insecurity. The Act stipulates in the subsections that its the President’s prerogative to determine when this exemption is needed.
While most citizens and observers would agree that the country is in a state of crisis and so qualify for the exemption within the Act, this is not the tone of the President Buhari-led government. The President’s position from his latest interview is that Nigeria is in a better position than it was before.
If the government does not think the country is in a situation of crisis, war or insecurity then the budget deficit should have stayed within the bounds of the 3% benchmark as stipulated by the Fiscal Responsibility Act.