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Nigeria recorded a N3.09 trillion deficit in its 2022 budget operations between January and April.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, made the startling revelation on Thursday at the Public Consultative Forum on the draft Federal Government 2023-2025 Medium Term Fiscal Framework & Fiscal Strategy, in Abuja.

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According to the Minister, the deficit brought to the fore the lingering fiscal challenges facing the government.

Aside the staggering deficit, Ahmed pushed for complete elimination of petrol subsidy, stressing that projections show that fuel subsidy may gulp about N6.72 trillion in 2023, a development that could wipe off the nation’s entire revenue for the year.

“We have two scenarios here. Business-as-Usual scenario: This assumes that the subsidy on PMS, estimated at N6.72 trillion for full year 2023, will remain and be fully provided for.

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“Scenario 2 –Reform scenario: This assumes that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.

“As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 per cent of the prorata target of N3.32 trillion.

“The actual spending as of April 31st was N4.72 trillion. Of the N4. 72 trillion, N1.94 trillion was spent on debt service; N1.26 trillion on personnel cost, including pensions; and N773.63 billion on capital expenditure”.

The Minister further disclosed that the Nigerian National Petroleum Company Limited (NNPC) which hitherto funded the fuel subsidy until last month would offload that responsibility to the federation.

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This, she noted would further exert a huge strain on the fiscal position of the Federal Government, while describing fuel subsidy as a monster that must be decimated. The Minister frowned at the low oil revenue amid hefty subsidy payouts, that has resulted in zero remittance to the Federation Account by the NNPC.

According to her, “The gross oil and gas federation revenue for full year 2022 was projected at N9.37 trillion. As at April 30, 2022, N1.23 trillion was realised out of the prorata projection of N3.12 trillion, representing a mere 39 per cent performance.

“Despite higher oil prices, oil revenue underperformed due to significant oil production shortfalls for two main reasons: oil production shut-ins resulting from pipeline vandalism and crude oil theft; and high petrol subsidy cost due to higher landing costs of imported products.

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She added, “Actual average crude oil price is higher than the budget benchmark price of $73 per barrel. However, higher oil price is offset by lower oil output, which as of April 2022 stood at an average of 1.32 mbpd.”