AT the unveiling of Draft 2010-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) in Abuja on Tuesday, Minister of Finance, Budget and Planning Mrs Zainab Ahmed announced that Federal Government was planning a reduction in the size of 2020 budget as compared with that of 2019.
Overall, the size of the 2020 budget was being projected at N9.789 trillion including the budget of Government Owned Enterprises (GOEs) as compared to N10.068 trillion for 2019.
According to her, when GOEs budgets are removed Government was projecting N8.907 trillion against the N8.916 trillion for 2019.
Some of the other key assumptions upon which the budget would be based include N305/$, oil production of 2.18 million barrels per day as against the 2019 figure of 2.3 million barrels per day; oil price benchmark of $55/barrel; inflation rate of 10.81 percent; GDP growth rate of 2.93; nominal GDP of N142.96 trillion; and nominal consumption of N122.7 trillion.
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The Minister explained that although oil production projection of 2.18mbpd for 2020 “is lower than the projected oil production volume of 2.3mbpd for 2019, we believe that this is a more realistic projection.
“Actual daily crude oil production and exports have been well below budget projections since 2013, despite the installed capacity of up to 2.5mbpd, for a number of reasons.
“For 2018, actual production was 1.84mbpd and for the first half of 2019 it was 1.86mbpd (base production).”
Total revenue projection stood at N7.6 trillion made up of N4.98 trillion from oil and mineral sources; N1.554 trillion (share of federation account) and other independent revenue sources.
Of the N9.7 trillion, Statutory Transfers (to National Assembly, Judiciary INEC and other such bodies) will gulp N526.4 billion; debt service will consume N2.452 trillion; sinking fund (to pay off maturing debt) N296 billion; while N4.749 will be devoted to non-recurrent debt issues like personnel costs, pension, gratuities, amnesty programme etc.
For capital expenditure, she announced a planned reduction by 11 per cent from N3.184 trillion in 2019 to N2.053 in 2020 inclusive of transfers.
She stated that new borrowings for 2020 will amount to N1.7 trillion made up of N850 billion foreign and N850 billion domestic borrowings while total deficit would amount to N2.15 trillion.
“Personnel cost (inclusive of Pension Costs) at over N3.0 trillion has continued to rise. The FGN is, however, taking steps to contain the rising personnel costs, including an October 2019 deadline by Mr President for all MDAs to implement IPPIS.
“Thus, key reforms such as the Strategic Revenue Growth Initiative (SRGI) will be implemented with increased vigour to improve revenue collection and expenditure management.
“In furtherance of our objective of greater comprehensiveness and transparency in the budget process, it is proposed that the FGN budget from 2020 will reflect the revenues & expenditures of GOEs and the multi-lateral/bi-lateral project-tied loans and related expenditures.”
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