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AMINA HUSSAINI, Abuja
Following the review of the 2020 Budget, Zainab Ahmed, the Minister of Finance, Budget, and National Planning said the amount available to run the year’s fiscal plan is now estimated at N5.548 trillion, representing a 34 percent or N2.87 trillion cut from the initial N8.419 trillion that was approved.
The revised budget will be submitted to the federal parliament for scrutiny and approval next week, according to Ahmed who disclosed Thursday at a meeting with the leadership of the National Assembly where she briefed them on the amendments to the N10.59 trillion 2020 budget passed by the National Assembly last December.
The meeting had in attendance, principal officers from both chambers, and was presided over by the President of the Senate, Ahmad Lawan, and the Speaker of the House of Representatives, Femi Gbajabiamila.
At the meeting, the Finance Minister explained that “the US$57 crude oil price benchmark approved in the 2020 budget is no longer sustainable”, adding that “it is necessary to reallocate resources in the 2020 budget, to ensure the effective implementation of required emergency measures, and mitigate the negative socioeconomic effects of the COVID-19 pandemic.”
The federal government after its cabinet meeting Wednesday announced a review of its 2020 fiscal plan in line with the global economic outlook and relevant domestic considerations.
The assumptions for the 2020-2022 Medium Term Expenditure Framework (MTEF) and the 2020 Budget were thus revised, and the crude oil benchmark was slashed from US$57 per barrel to US$25 per barrel; while crude oil production benchmark was reduced from 2.18 million barrels per day to 1.9 mbpd.
In addition, the budget exchange rate was adjusted to N360/US$1 while the upfront fiscal deductions by the Nigerian National Petroleum Corporation (NNPC) for mandated Oil and Gas sector expenditures were cut by 65 percent from N1.223 trillion to N424 billion.
With the review, the federal government’s aggregate expenditure budget was slashed by N88.412 billion; Statutory Transfer from N560.47 billion to N397.87 billion; and Overhead costs of Ministries, Departments, and Agencies (MDAs) from N302.43 billion to N240.91 billion.
Debt Service provision was, however, increased from N2.453 trillion to N2.678 trillion.
On the Provision of N500 billion for the COVID-19 Intervention Fund, the Finance Minister explained that N263.63 billion will be sourced from Federal Government Special Accounts, N186.37 billion from Federation Special Accounts and the balance of N50 billion expected as grants and donations.
According to her, “the sum of N186.37 billion will be applied toward COVID-19 interventions across the federation, while an additional N213.60 billion was provided in the Service Wide Votes for COVID-19 Crisis Intervention recurrent expenditures.”
She disclosed that while a total of N100.03 billion was provisioned in the Intervention Fund for new capital spending, the Federal Government carried out a cut in capital expenditures for MDAs from N1.564 trillion to N1.262 trillion.
The Senate President, however, insisted that the interest of Nigerians must be protected in the proposed cut to the 2020 national budget as he requested for the timely submission of the proposed amendment to the 2020 budget which the Minister said would be presented to the National Assembly by next week.
“The budget amendment is very important, but I believe that when we are faced with this kind of challenge (COVID-19 pandemic), it is an emergency and we should do everything and anything possible to fast track the passage and implementation of the government intervention that is so critical and crucial at this stage.
“I believe that we shouldn’t delay it any longer. Next week, and I will suggest the early part of next week, we should have that document(MTEF) ready so that we can consider it alongside the budget. It is supposed to be the tonic of what Nigerians are waiting for.
“We have listened to the various adjustments you have made to avoid going into recession. However, to avoid going into a deeper recession, I think we need to do a little bit much more.
“After this meeting with the leadership, I suggest that you engage with our relevant committees in the Senate and House of Representatives to look at the nitty-gritty that would be considered more in detail at the presentation level.
“On the whole, let me assure you that the National Assembly and Executive arm are on the same page, and that is to say that we will work to ensure that we have a budget 2020 amendment that will address the needs of the people of this country.
“One thing is that the net public expenditure must be targeted at net maximum performance for the benefit of the people of this country.
“In other words, we must come up with an amended budget that is operable and favorable to Nigerians,” Lawan said.
The Speaker, House of Representatives, Femi Gbajabiamila pushed for a feasible benchmark in the proposed amendment to the 2020 budget.
“The benchmark is so critical and so important because once you passed the law, it becomes difficult to adjust that benchmark, and then what happens to the excess?
“We have always had problems with the Excess Crude Account, potentially an account which has no backing of the law. So, let’s even assume that the price remains static at $35, which means we have $10 going to the Excess Crude Account which we have no control over in terms of spending, that is why we guard that benchmark price very jealously.
“Is there a possibility of having a proviso built-in in the budget…So that there can be an automatic kick in if the benchmark price goes beyond $26 or $27. We want you to explore that possibility.
“So, I think you should study the market and see what happens next week by the time you present the adjusted budget,” Gbajabiamila said.
On Nigeria’s debt profile, the Speaker said, “I would also want to address the issue of our deficit and tie it with the issue of debt relief. I’m not sure I heard any presentation on how much we owe and how much we are paying back in this budget.
“The reason I asked is that at the moment, I believe, for want of a better word, some of our creditors are very vulnerable right now. And depending on how you package your case, I believe they should be the ones coming to beg you to take debt relief, if not outright cancellation.”
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.
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