Economic experts believe there is a strong likelihood that the Federal Government will continue to grow its domestic borrowing and reliance on the Central Bank of Nigeria’s (CBN) ways and means window in 2023 despite its unlikely preference for the Eurobond market.

The N21.83 trillion 2023 appropriation bill was signed into law by President Muhammadu Buhari last week, making it the last time he would do so in his capacity as Nigeria’s head of state.

The Ministry of Works and Housing received the majority of the budget’s N398.2 billion, followed by the Defense sector with N285 billion, agriculture and rural development with N248.3 billion, education with N153.7 billion, and health care with N134.9 billion.

Foreign debt servicing received N1.81 trillion, while domestic debt (including Ways & Means from CBN) received N4.49 trillion. N247.72 billion was allotted for a Sinking Fund to pay off maturing loans.

According to reports, the techniques and means have already gone beyond what is considered acceptable on a global scale. This implies that if the binge borrowing continues, the rate of servicing Nigeria’s debts will rise.

According to analysts at Cordros Securities, the FG now anticipates total revenue of N10.49 trillion in 2023FY, consisting of N2.23 trillion from oil, N2.43 trillion from non-oil sources, N2.62 trillion from independent sources, N2.42 trillion from GOEs, and N10 trillion from other sources (N794.13 billion).

The government anticipates that a fiscal deficit of N11.34 trillion will be funded by a combination of borrowing on domestic markets (N7.04 trillion), borrowing abroad (N1.76 trillion), funding from multilateral and bilateral organizations (N1.77 trillion), proceeds from privatization (N206.18 billion), and additional income from spectrum fees and taxes on the maritime industry (N553.46 billion).

“Our revised projections show the 2023 FY budget deficit could print between N12.35 – N14.53 trillion, with a base case scenario of N13.28 trillion, factoring in existing realities and risks. Given that the government is unlikely to use the Eurobond market in the 2023 fiscal year and that international investors continue to favor safe-haven assets, they added. “We expect the FG to increase its domestic borrowing and reliance on the CBN’s ways & means advances.”

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