OrderPaperToday – President Muhammadu Buhari has formally written to the National Assembly requesting the approval of the revised 2020 budget of N10.27 trillion from N10.59 trillion.
He is also requesting approval for a reviewed 2020-2022 Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP).
The letter was sent to both chambers and was read by the presiding officers, Ahmad Lawan and Femi Gbajabiamila on Tuesday during Plenary.
The cut became necessary due to sharp decline on crude oil prices and the cut in Nigeria’s crude oil production quota occasioned by COVID-19 pandemic.
The letter reads: “It is with pleasure that I forward the revised 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) and the revised appropriation bill for your kind consideration and approval by the senate.
“Let me use this opportunity to express my deep gratitude for the patriotism operation and support by the distinguished members of the senate in our collective effort in the appropriation act 2020 and accelerate its implementation. It has become necessary to pass the 2020-2022 MTEF/FSP and amend the appropriation act 2020 in view of the sharp decline on crude oil prices and the cut in Nigeria’s crude oil production quota occasioned by COVID-19 pandemic.
“In effect, the assumptions underlying the 2020 appropriation act are no longer sustainable. It is also imperative to adjust expected revenues disruptions and economic activities as well as international trade and transportation due to the measures implemented across the world to curtail the spread of COVID-19 pandemic.
“Furthermore, it is necessary to reallocate resources in the appropriation act 2020 to ensure implementation of required emergency measures and other actions necessary to mitigate socio-economic effects of COVID-19 pandemic.”
Lawan referred MTEF to the Senate Committee on Finance and the budget to the committee Appropriation and they are expected to report back Tuesday next week .
Meanwhile, the Finance Minister, Zainab Ahmed in a previous meeting with Lawan and Gbajabiamila gave the break down of the revised budget.
She said: “The US$57 crude oil price benchmark approved in the 2020 budget is no longer sustainable.
“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 US$57 per barrel to US$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/US$1; and reduced the upfront fiscal deductions by the Nigerian National Petroleum Corporation (NNPC) for mandated Oil and Gas sector expenditures by 65 percent 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 percent (N2.87 trillion) lower than what was initially approved.
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 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 provisioned 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.