This [deficit] is significantly above the three per cent threshold stipulated in the Fiscal Responsibility Act, 2007 and there will be no provision for treasury-funded MDA’s capital projects in 2023.” —Minister of Finance, Aug 29, 2022.
In one sentence, the Buhari gov ernment openly announced that it will break the law with impunity and reduce capital expenditure in 2023.
If Nigerians need any reason to vote against the APC, this disaster has provided it. Everybody is aware of fraudsters who float financial and investment schemes promising mouth-watering returns on investment; and after taking vast amounts of money from gullible individuals, they vanish into thin air. Buhari’s government will also soon disappear; but, apparently not without foisting on Nigerians another bogus budget for 2023. The usual accomplices will help in the scheme which will lead Nigeria forward to economic ruin.
The Senate President will be there to push the Appropriation Bill through; so will my brother, Gbajabiamila – who attended a short course at Harvard University, USA, while Nigerian universities were shut. Nobody should expect anything commendable from the Buhari/APC government. They have nothing better to offer.
The leading statement was made by the Minister for Finance, Budget and National Planning the author of five previous drivels presented to the National Assembly, NASS, as annual budgets. There was never any doubt in her mind that it will be passed – as usual.
There has never been any doubt in my mind that 2023 will again end in escalating Nigeria’s economic catastrophe. Buhari should live long enough to learn the truth about how he absolutely ruined Nigeria’s economy in his eight years in office. Certainly, nobody in this government or the NASS will ever be able to claim any credit for their roles in bringing the country to economic destruction.In case you don’t know, the 2023 Budget, like the previous ones by Buhari, has already failed woefully for the same reasons that others ended in calamity. It is based on false assumptions and the framers are deficient in simple arithmetic; in a situation where you need people who have mastered complex equations.
Elements of a Ponzi scheme“N19.76tn budget proposal: N12tn deficit worries FG, debt may hit N54trn.” “2023 budget: FG pegs deficit between N11.30tn, 12.41tn.”— Reports from leading national newspapers, August 30, 2022.Before addressing the substance of the budget proposal for 2023, another horror show, it is important to explain how a Ponzi scheme works and why it is inevitably doomed to collapse. A Ponzi scheme operates on an inverted triangle.
The schemers promise impossible returns on investments to those gullible to believe them, but on condition that they recruit other investors. The first group is paid from deposits by the second set — who become their canvassers. Quite frequently, they are paid and then induced to re-invest. That is the trap. They never get their money back after that — because the scheme depends on getting more and more people to invest to succeed. The scam starts to collapse once they fail to get the number of subscribers they need to stay in business.
“The annual Nigerian budget, since 2016, has all the elements of a Ponzi scheme; and it will collapse for the same reasons. The 2023 Budget and the Medium Term Expenditure Framework/Fiscal Strategies, MTEF/FS which were presented to the National Assembly, NASS, are both premised on borrowing more and more money indefinitely into the future. That is precisely why Ponzi schemes fail. They fail when the entire new money coming in cannot cover current obligations. Defaults follow and thereafter nobody wants to lend the entity any more money. Nigeria is now on the knife-edge of economic disaster. Let me mention a few signs of the dangers ahead.
BUDGET 2023: The last gasp of a dying economy“In this scenario, the budget deficit is projected to be N11.30tn in 2023, up from N7.35tn in 2022. This represents 5.01 per cent of the estimated GDP (Gross Domestic Products), above the three per cent threshold Fiscal Responsibility Act, 2007.” —Finance Minister, Mrs Zainab Ahmed in Abuja.If you have read or listened to the Minister’s announcement without trembling, it is because pervasive ignorance in any country, especially African, is bliss. Black people are generally economic illiterates. She could not have made that pronouncement in Malaysia without provoking an uprising.
Several things should frighten all Nigerians who can read and understand figures. The most startling is the fact that the FG, which has failed to generate the budgeted revenue in the last seven years, is again promising expenditure of N19.76tn this year. Only 37 per cent of the projected expenditure will be covered by projected revenue generated; the remaining 63%, which will be the expected deficit will again be sourced from loans and ways and means granted by the now complicit Central Bank of Nigeria, CBN.Imagine, if you can, the head of a family, who expects to earn N700,000 next year; who then announces to his household that he intends to spend N1.9million. And based on that self-deceit, he promises his wife and kids a lot of goodies. “Any intelligent ten year-old girl or boy in the house must wonder how Daddy will honestly get the money to pay for all the promises.
The wife and kids, being aware that their father has been going heavily into debt, should worry when the bubble will burst; when Daddy will not find another lender. Then what?Meanwhile, the expenditure budget for the current year was projected at N17trn. We are beginning to know what is happening with that budget; and that should alarm all of us. Last month during the presentation of the MTEF/FS, the Minister of Finance announced to Nigerians, that in the first four months of 2022, the FG budgeted expenditure of N5.77tn; spent N4.72tn; earned revenue of N1.63tn and ended with a deficit of N3.09tn. Clearly, the Buhari FG is deficient in knowledge of how to manage public finance. A government which generates N1.63tn and spends N4.72tn is not doing Nigeria a favour by borrowing; it is ruining the economy. If you extrapolate the results for the first four months to the rest of the year, it means that instead of the N7.35tn expected deficit, we should be expecting at least N9.09trn deficit for this year. The additional N1.65tn deficit, covered by borrowing, will lift our debt burden to over N56tn in 2023.
Why South Korea is growing and Nigeria is sinking“For every folly of their [leaders], Nigerians feel the lash.” — Horace.Take a look again at the figures Mrs Ahmed, representing Buhari, just threw at us; and you must shed tears of blood for Nigeria for having this leader in charge. Then try and get hold of the past seven budgets presented by the APC/FG. The pattern has been the same from the first one in 2016 to this last one for 2023. A bunch of incompetent and deceitful people propose a huge budget, which more knowledgeable people know is unrealistic.
They get unpatriotic leaders of NASS to pass the budget; and then they fail on all the major parameters – expenditure, expected revenue, recurrent expenditure, capital allocation, projected deficit (always deficit) and GDP growth. They then increase all the budget estimates the next year. They have done this every year without exception. “Insanity has been described as doing the same thing over again and expecting a different result.” Certainly, the outcome of the 2023 budget will not be different. The same people prepared it.
The same lack of professionalism; the same penchant for lying.By contrast, South Korea announced a slightly smaller budget for 2023 than 2022. They have good economists who know too well that nothing goes up all the time — not even the budget.If Buhari wants additional N1tn revenue next year, he can get it without sweating; and reduce borrowing by that amount. He never admits ignorance.