FG to present revised 2020 budget next week

Barring last minutes changes, the Federal Government (FG) is expected to formally present the revised 2020 Appropriation bill of N10.58 trillion to the National Assembly.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, who disclosed this during high-level meeting held behind closed doors with the leadership of the Senate and House of Representatives, unveiled plans to increase debt servicing from N2.453 trillion to N2.678 trillion.

At the meeting, the Speaker of the House of Representatives, Honourable Femi Gbajabiamila who frowned on the breach of the extant financial laws and 1999 Constitution (as amended) warned against illegal virement of appropriated funds to finance COVID -19.

“I have in my possession, a letter from Permanent Secretary, Ministry of Health writing to agencies asking them to give up their releases towards COVID-19 for certain projects.

“If it’s true, then it’s clearly illegal and I think it should be looked into because these are projects that have been budgeted for, appropriated and for good reason, maybe what’s based on needs but based on the constituency. For a Permanent Secretary to be writing, saying that based on a letter from the President, they should source for it from the 2020 budget, it amounts to virement.

“That’s what it is, virement and that is appropriation through the back door. There are ways we do virement here (Legislature). It’s not for the Permanent Secretary to be writing to agencies that whatever money is allocated to them they should give it up and source for them elsewhere, that is illegal,” Hon Gbajabiamila warned.

The Speaker also underscored the need for relevant authorities in charge of fiscal and monetary policies to cultivate the culture of saving of excess revenue accruing from the sale of crude oil and adopt a feasible benchmark in the proposed amendment to the 2020 budget.

“We are not unmindful of the volatility of the oil prices and based on that, it is that volatility that should make us look at the feasibility of $27, not even $26, and as the Senate President noted, these are so volatile that even in one day things can change.

“Because we have another week before the presentation is brought to the National Assembly, I believe there will be room rather than us to be dogmatic about the $25 and nothing else.

“The reason why I said so is also because of the deficit.

“This is because the benchmark is so important and critical that once the law is passed, the benchmark becomes difficult to adjust, and now what happens to the excess?

“This is where we always have a problem with the excess crude oil account, potentially an account that has no backing of the law.

“Now let’s assume that the price remains static at say over $30, that means we have over $10 going into the Excess Crude Account of which we have no say and it’s spent with the whims and caprices of government. That is why we guard that benchmark price very jealousy.

“I think you should study the market and let’s see what happens next week by the time you present the adjusted budget,” the Speaker urged.

Speaking 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.”

Hon Gbajabiamila also urged Federal Government to explore the abounding opportunities in the multilateral funding, stressing the urgent need to review some of the loan agreement signed with some countries informed the House decision to set up a Committee during last Tuesday plenary, to look into some of the agreements.

Speaking earlier, the Minister of Finance, Budget and National Planning, Zainab Ahmed, while briefing the leadership of the National Assembly said, “the $57 crude oil price benchmark approved in the 2020 budget is no longer sustainable.”

The Minister said further 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.”

Ahmed stated that in line with the global economic outlook and relevant domestic considerations, the assumptions underpinning the 2020-2022 Medium Term Expenditure Framework (MTEF) and the 2020 Budget was revised to slash crude oil benchmark price from $57 per barrel to $25 per barrel; reduce crude oil production benchmark from 2.18 million barrels per day to 1.9 mbpd.

She added that the Federal Government also adjusted the budget exchange rate to N360/$1; and reduced the upfront fiscal deductions by the Nigerian National Petroleum Corporation (NNPC) for mandated Oil and Gas sector expenditures by 65 per cent from N1.223 trillion to N424 billion.

She disclosed that the amount available for funding the 2020 budget is now estimated at N5.548 trillion, down from N8.419 trillion, a revised revenue estimate which is 34 per cent (N2.87 trillion) lower than what was initially approved.

According to her, Federal Government’s aggregate expenditure budget was reduced by N88.412 billion; Statutory Transfer from N560.47 billion to N397.87 billion; and overhead costs of ministries, departments and agencies of government from N302.43 billion to N240.91 billion.

Debt service provision was, however, increased from N2.453 trillion to N2.678 trillion.

On provision of N500 billion for COVID-19 Intervention Fund, the Finance Minister in her presentation 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 provided in the Intervention Fund for new capital spending, the Federal Government carried out a cut in capital expenditures for Ministries, Departments and Agencies of Government from N1.564 trillion to N1.262 trillion.

The Federal Government’s delegation also unveiled plans to roll out N2.3 trillion stimulus package as well as loan component as part of efforts geared toward revitalising the economy.

 

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