Medium-term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) Review
In line with the relevant provisions of the Fiscal Responsibility Act 2007, the President of the Federal Republic of Nigeria presents Medium-term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) to the National Assembly. NABRO, as a non-partisan budget performance review office, assesses such reports and presents estimated reviews to the National Assembly. In some cases, reviews were carried out to improve revenue from non-oil sources and reduce the recurrent expenditure ratio. Also, to free up resources for infrastructure development, effectively manage the debt profile, strengthen the investment climate, promote job creation and inclusive growth.
Key Features of (MTEF/FSP) Review
The NABRO MTEF/FSP reviews address Macro-economic Framework, the annual budget, key assumptions, fiscal strategy, debt profile, and sustainability, among others.
MTEF/FSP and Nigeria's Debt Profile
Study reveals that Nigeria has one of the lowest non-oil tax to GDP ratios. This should be addressed by making the rich to pay more taxes to increase non- oil revenue. We believe that recurrent expenditure should be reviewed and adjusted downwards to reflect reality without affecting the ability to pay salaries and wages and providing reasonable over heads vote to enable the system to remain functional.
In particular, National Assembly should request details of the Service Wide Votes for a closer look to review it downwards.
Recently the Nigeria Employers Consultative Association, NECA, on Wednesday January 11, 2023 stated that Nigeria’s debt profile could hit N77 trillion in June 2023, saying that returning the economy to the path of sustainable growth demands certain fundamentals must be gotten right.
At the last count, the nation is neck-deep in debts hovering around N44.06 trillion in September 2022. However, if the N23.7 trillion CBN loan is securitized, our debt stock could amount to about N77 trillion in June 2023. Crude oil production grew in December 2022 by 4.2 percent month-on-month to 1.23million barrels per day but remained significantly short of the 1.8million barrel per day allocated by OPEC to the nation, amounting to about $2.5billion loss monthly at an average of $100pb. Oil theft seems to continue unabated, and the unsustainable subsidy on petroleum products have all conspired to reduce Government's revenue, leading to excessive debt accumulation.
NABRO noticed that Nigeria’s public debt portfolio may become unsustainable in the medium to long run. It is observed that debt service is already crowding out capital expenditure. This has the tendency to reduce debt sustainability in the long run. It is therefore not advisable to incur debts for purposes other than investment in viable infrastructure projects.