Buhari signs N10.8tn revised 2020 budget

*Directs release of 50% of capital expenditure

*FG records N1.48tn revenue in 2020, expects decline in govt revenues

*Economy to begin recovery before year end

President Muhammadu Buhari has signed into law the revised N10.8 trillion 2020 budget, and directed the release of at least 50 per cent of the approved 2020 revised capital expenditure to Ministries, Departments and Agencies (MDAs).

The News Agency of Nigeria (NAN) recalled that the Federal Executive Council (FEC) had on May 13, approved a revised budget of 10.523 trillion.

However, the two chambers of the National Assembly – the Senate and House of Representatives — increased the budget from the initial N10.5 trillion submitted by the President to N10.8 trillion.

The figure shows that the sum of N2,488,789,433,344 is for capital expenditure, while N4,942,269,241,984 is for recurrent non-debt expenditure.

Others are N2.6 trillion for debt service and N2.9 trillion for sinking funds.

After signing the budget on Friday at the Council Chamber of the State House, Buhari said that the budget had to be revised because of the effect of coronavirus on the nation’s economy.

According to him, MDAs will be given 50 per cent of their capital allocation by the end of the month.

The event was witnessed by Vice-President Yemi Osinbajo, Senate President Ahmed Lawan, Speaker Femi Gbajabiamila, Secretary to the Government of the Federation Boss Mustapha; Chief of Staff to the President, Prof. Ibrahim Gambari.

The Minister of Finance, Budget and National Planning, Zainab Ahmed; Minister of State Finance, Clement Agba, Governor of Central Bank of Nigeria, Godwin Emiefile and Director General, Budget, Ben Akabueze were also at the event.

Meanwhile, the federal government has announced a total of N1.48 trillion from January to May 2020, Minister of Finance, Budget and National Planning, Mrs. (Dr) Zainab Ahmed has disclosed.

Ahmed who made the disclosure during the virtual presentation of the Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) in Abuja also stated that the amount represents 56% of the total revenue target for the government.

She said: “At the end of May, federal government revenues stood at N1.48 trillion which is 56% of the total target. Oil revenues was N701 billion while non-oil revenues were N439 billion which both represents 65% target.

“Company Income Tax (CIT) and Value Added Tax (VAT) collections were N213bn and N68bn respectively, representing 62% and 58% respectively. Also, Customs collections was N158bn representing 73% target,”

On expenditure performance, the minister stated that N253 bn has so far been released for capital projects in the 2020 budget from January to May 2020, while N1.25trn and N1.32trn was expended on debt servicing and personnel cost expenditure including pension respectively.

On key assumptions in the revised 2020 budget, Ahmed stated that the federal government have premised the revised budget based on the current economic realities occasioned by the Coronavirus pandemic.

“Oil prices was pegged at $28 per barrel but oil is currently selling at $38 per barrel, oil production was put at N1.80 million barrels per day while the current production is now at N1.88.

“Inflation for 2020 was projected at N14.13%over the period for the whole year but the current inflation is now at 12.40% while GDP growth rate was projected to 4.42%, but currently stands 1.87%,” Ahmed said.

She however stated that the Gross Domestic Product (GDP) projections for 2020 is put at 4.20% as the economy is expected to begin recovery before the end of the year.

Similarly, the nominal Gross Domestic Product (GDP) is expected to increase from N130,836.1 billion in 2020 to N132,125.4 billion in 2021 and then up to N138,415.8 billion in 2023.”

This she said will be triggered by the injection of the N2.3 trillion economic stimulus package to keep the economy afloat and avert recession.

The said amount was recommended by the Economic Sustainability Plan(ESP) chaired by the Vice president and later approved by the Federal Executive Council (FEC).

Speaking on key projections of the MTEF for the year 2021, the minister said was in line with macro-economic factors.

In the forecast for 2021, oil price is benchmarked at $35 per barrel, oil production is put at 1.80 mbpd, exchange rates of N360/$1 with a real GDP growth of 3% and inflation rate of 11.95%.

Giving reasons for the MTEF assumptions, Ahmed stated that “Nigeria has a production capacity of 2.5mbpd but is currently producing 1.4mbpd in complaince with OPEC production cut and additional 300,000mbpd which totals 1.7mbpd.

“Also, World bank forecast oil prices will average $42pb in 2021 to $44pb in 2022 and $47pb in 2023.

“However, inflation is expected to remain above single digits over the medium term given the structural issues and the impact on cost of doing business including high cost of food distribution,” she explained.

Speaking further on expectations for revenue, the minister says government expects a huge drop in revenue owing to cut in oil production in compliance with OPEC directives as well as reduction in Customs collections.

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“We have about 300,000 bpd cuts in oil production currently. The impact of these developments is about 65% decline in projected net government revenues especially from oil and gas sector with adverse consequencies for exchange inflows into the economy.

“Unless we achieve a strong Q3 economic performance, Nigerian economy is likely to lapse into a second recession with significant adverse consequencies.

“Also the disruptions in global trade and logistics would negatively affect Customs duty collections in 2020. The Covid-19 containment measures though necessary are inhibiting domestic economic activities with consequential impact on taxation and other government revenues, which makes it imperative to adjust previously projected Customs duty, stamp duty, Value Added Tax and Company Income Tax revenues,” Ahmed further explained.

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