By Modupe Gbadeyanka
The federal government will present the amended 2020 Appropriation Bill to the National Assembly next week.
On Thursday, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, briefed leadership of the parliament on the plan by the federal government to amend the N10.59 trillion 2020 budget passed by the legislative arm of government last December.
At the meeting led by the Senate President, Mr Ahmad Lawan, and Speaker of the House of Representatives, Mr Femi Gbajabiamila, the Minister said, “The $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,” she added.
Mrs 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 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 MDAs from N1.564 trillion to N1.262 trillion.
The Senate President, while speaking, assured that the parliament will expeditiously consider the proposed amendment to the 2020 budget.
According to him, “The budget amendment is very important, but I believe that when we are faced with this kind of challenge (COVID-19 pandemic), it is an emergency and we should do everything and anything possible to fast track the passage and implementation of the government intervention that is so critical and crucial at this stage.
“I believe that we shouldn’t delay it any longer. Next week, and I will suggest the early part of next week, we should have that document (MTEF) ready so that we can consider it alongside the budget. It is supposed to be the tonic of what Nigerians are waiting for.”
In his contribution, Speaker of the House of Representatives called on the federal government to adopt a feasible benchmark in the proposed amendment to the 2020 budget.
He said, “The benchmark is so critical and so important, because once you passed the law, it becomes difficult to adjust that benchmark, and then what happens to the excess?
“We have always had problems with the Excess Crude Account, potentially an account which has no backing of the law. So, let’s even assume that the price remains static at $35, that means we have $10 going to the Excess Crude Account which we have no control over in terms of spending, that is why we guard that benchmark price very jealously.
“Is there a possibility of having a proviso built in in the budget…So that there can be an automatic kick in if the benchmark price goes beyond $26 or $27. We want you to explore that possibility.
“So, I think you should study the market and see what happens next week by the time you present the adjusted budget.”
Adedapo Adesanya