By Chima Christian
The Executive Governor of Anambra State, Prof. Charles Chukwuma Soludo, today, Thursday, November 10, 2022, presented the 2023 draft budget to the Anambra State House of Assembly.
He termed it a “Budget of Acceleration.” The total budget size is N260 billion, up from the revised 2022 budget of N170 billion.
Capital expenditure is expected to gulp N164.2 billion representing 63.2% of the total budget size while recurrent expenditure is at N95.5 billion representing 36.8% of the total budget size.
The deficit is pegged at N13 billion, and this is where it gets interesting.
Earlier in the year, Soludo obtained the approval to borrow N100 billion. Providing more details, the Commissioner for Budget, Economic Planning and Development Partners, Ms Chiamaka Nnake said N42 billion out of the N100 billion will be deployed in the 2022 fiscal window while the balance of N58 billion will be used to partly finance the 2023 budget.
Agreeing with her while giving updates on the status of the N100 billion loan today, Gov. Soludo told the Anambra State House of Assembly that he will roll over part of the N100 billion loan to fund the 2023 budget.
His exact words: “Mr. Speaker, this House approved for us to borrow N100 billion to part-finance the revised 2022 budget. So far we have not borrowed a kobo. We have however applied for N90 billion out of the approved N100 billion, and when it comes (we expect so in a few weeks’ time), we plan to roll it over as part of the 2023 financing.”
If the government sticks to its earlier plan, it will roll over N58 billion Naira to bridge the 2023 budget deficit. However, if the government adjusts that figure because of the delay in obtaining the loan and seeing that there are only less than two months to the end of the 2022 fiscal year, the government is expected to roll over more than N58 billion.
With this, the government is right, yet dancing around numbers when it says in the 12th paragraph of the first reading of the budget that the 2023 budget deficit is only 13 billion Naira. I’ve been told by an accountant that it is technically right to file a 2022 debt as revenue in 2023.
On the surface, it seems all cool that the 2023 deficit is N13 billion representing only 5% of the budget size. If we are to remove all accounting niceties and file all loan components of the 2023 proposed budget as deficits, then the deficit should be hovering around N71 billion.
By relying solely on accounting semantics, the government has significantly played down its reliance on borrowings to fund its ideas. While borrowing in itself is not bad, putting Anambra’s debt profile in a proper context paints a truer picture of the situation.
Anambra’s domestic debt profile as of June 30, 2022, is N72 billion. So if it took Willie Obiano eight years to acquire a domestic debt of N72 billion, all it is taking Soludo is 8 months to shoot that up to N162 billion.
Moreso, it is probable, given the 2023 estimates, that the government is planning an additional loan of N13 billion when it exhausts the approved N100 billion loan next year.
Although Soludo’s reliance on debts is a clear departure from the fiscal norms instituted in Anambra by Gov. Peter Obi, the state’s debt profile is very much within a healthy zone. Efforts must however be made to track the sharp and continuing increase in the state’s debt profile. Additionally, citizens should get interested in tracking the utilisation of the loan to ensure that the tax-paying public gets maximum value for the money that is borrowed in their name.
More to come as we look into the state’s medium-term expenditure framework and sectoral analysis of the proposed budget in the coming days and weeks.
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