By Adedapo Adesanya
Federal Government is planning to borrow the sum of N1.7 trillion to finance the 2020 budget, which is expected to be presented to the National Assembly later this month. This amount to be borrowed by government is higher than the N1.6 trillion borrowed to fund the 2019 budget.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, gave a hint of this planned borrowing on Tuesday at the presentation of the Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), where she said the size of the proposed 2020 budget was N9.78 trillion.
On the proposed budget, the Finance Minister disclosed the downward review of capital expenditure in the country. According to Mrs Ahmed, the aggregate capital expenditure in 2019 was N3.187 trillion but in 2020, it has been lowered to N2.05 trillion.
“Key Assumptions of the 2020 Budget Framework: Oil Production 2.18 mbpd; Oil Price $55/b; Exchange Rate N305/$; Inflation Rate 10.81 percent; Nominal Consumption N122.75 trillion; N142.96 trillion Nominal GDP; and GDP Growth Rate of 2.93 percent,” she said.
Speaking further on the proposed 2020 budget of N9.78 trillion, the Minister stated that oil revenue was projected to decline, while non-oil revenue was tipped to grow marginally.
“Oil revenue is projected to decline from N3.688 trillion in 2019 to N2.367 trillion in 2020. This is due to lower production and lower oil prices,” she stated.
Mrs Ahmed then stated that the new borrowings would be 50 percent from external sources, while 50 percent would be from domestic sources.
“New borrowing is put at N1.605 trillion for 2019, projected at N1.7 trillion for 2020, N1.6 trillion for 2021 and N1.3 trillion for 2022. The borrowings will be 50 percent local and 50 percent foreign,” she said. This means the sum of N850 billion would be sourced from the domestic market and another N850 billion from the external market
The Minister also confirmed that the debt service obligations for the country had also risen significantly as a result of increase in the country’s national debt.
The Federal Government then used the opportunity to warn Nigerians to brace up as the 2020 to 2022 fiscal years, which would be challenging with respect to revenue generation and rapid growth in personnel costs.
Modupe Gbadeyanka