Amid discordant tunes from Senators, the Senate last Wednesday approved parameters and projections proposed in the 2022 – 2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). TAIYE ODEWALE reports
Meaning of MTEF/FSP
The Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), are required statements of intentions by the executive arm of government on yearly basis upon which budgetary estimates are based.
The need for such three years proposed and projected expenditures and revenues on certain parameters by the executive for consideration and approval of the legislature is provided for by relevant provisions of the Fiscal Responsibility Act, as the basis upon which budgetary estimates of the fiscal year following its submission, consideration and approval are based.
Little wonder that at the level of consideration, the 2022 component of the just approved 2022 – 2024 of such projections and proposals were concentrated upon by committees saddled with such purpose which also limited their report cum recommendations on proposed and projected estimates for 2022 fiscal year.
The 2022 proposals and projections
For the 2022 fiscal year, as proposed by President Muhammadu Buhari, N13.98trillion is the estimated total expenditure profile with projected revenue of N8.36trillion, fiscal deficit of N5.62trillion, new borrowings of N4.89trillion and debt service estimate of N3.12trillion.
Others are proposed recurrent expenditure component of N6.21trillion, capital component of N3.47trillion and statutory transfers totalling N613.4billion.
The projections and proposals were based on parameters and assumptions of $57 per barrel oil price benchmark, 1.88million barrel oil production per day, N410.15 to US dollar exchange rate, 4.20% projected GDP growth rate and inflation rate of 13.00%.
Consideration and approval
In line with legislative practices and procedures, the proposals and projections were subjected to scrutiny by the Senate by mandating its relevant committees to interface with heads of the various federal government owned Ministries, Departments and Agencies (MDAs) on revenue profile of the projections.
Expectedly, the committees headed by the Committee on Finance, had three days of interactive sessions early in the month with the heads of the various government agencies, particularly the revenue generating ones on how the proposals and projections can be reviewed in a way of reducing the N5.6trillion deficit budgeting and proposed N4.89 trillion new borrowings but ended up representing the proposals as forwarded by the executive for approval.
The discordant tunes
Though the report was approved by the Senate as presented by the Chairman of the Senate Committee on Finance, Senator Solomon Olamilekan Adeola (APC Lagos West), but some Senators kicked against wholesale adoption of the proposals and projections as recommended.
First to make such submission was Senator Gabriel Suswam (PDP Benue North East) who said the issues of increasing budget deficits and borrowings for its implementation on yearly basis, must be critically looked into.
“Deficit has gone beyond the threshold of the Fiscal Responsibility Act. It was last year above and this year too. The same thing with debt service to ratio of revenue which is 25.5% or about 30%, meaning that today from every N100, N67 is spent for debt servicing.
“These are very scary scenarios that must be addressed in preventing the Nation’s economy from further nose diving as far as deficit budgeting and poor revenue generation are concerned.
“More worrisome is the dwindling rate of revenue generation like Stamp duty collection which was N500billion before but now reduced to N299billion. The chunk of revenues being lost on yearly basis through waivers and Deferrers need to be checked as well because N2.4 trillion lost in the process is not a small money .
“On the Value Added Tax ( VAT) alone, waivers worth of N900billion are given to some investors without corresponding development – driven services and interventions “, he lamented .
Also kicking against wholesale adoption of the proposals and projections, Senator Adamu Aliero (APC Kebbi Central), said the $57 per barrel oil price benchmark was too low when compared to the $75 to $76 per barrel it sells now in the international market.
“There is need for the Senate and by extension the National Assembly to jerk up the proposed and recommended $57 per barrel price to $65 per barrel.
” Leaving the gap of about $18 to $20 on each barrel of the oil sold is an invitation to all manner of misappropriation later because the excess will go into Excess Crude Account which has been subject of controversy and contention between the centre and the federating units over the years.
“Aside the oil price benchmark, the federal government should also look inward for the required revenues to fund the budget implementation and not new borrowings on yearly basis so as not to end up as hugely indebted nation “, he said.
Other Senators like James Manager (PDP Delta South), Albert Bassey Akpan (PDP Akwa Ibom North East ), George Thompson Sekibo ( PDP Rivers East) etc, also in their various submissions, picked holes in some of the proposals and recommendations but were countered by Senators like Jibrin Barau (APC Kano North), Solomon Adeola (APC Lagos West) etc.
Adeola being the presenter of the report, reacted to all the observations made by fellow senators on the recommendations by saying that the volatility of price of oil in the international market, made the committee to adopt the $57 per barrel price benchmark proposed by the Executive and that the N5.6 trillion deficit budgeting is not the figure for the new borrowings which according to him, is N4.8 trillion.
The N1 trillion balance he explained, will be sourced by the federal government from proceeds of national assets to be sold and recovery of looted funds from corrupt public officers.
He emphasized that on the side of revenue, the country is making remarkable progress, particularly on Independent revenue which he said for this year alone, out of the N600billion projected, N800billion had been realised as at the end of August this year, with clear possibility of hitting a trillion by December this year.
Also countering submissions of some of the Senators in his remarks, the President of the Senate, Ahmad Lawan, said though borrowings need to be reduced but the need for it now was forced on us by misdeeds of the past.
“When you don’t make hey when the sun shines, we get what we are getting now. We wasted our money in the past, making our options now to be very limited.
“I agree that we need to reduce borrowings but we need to borrow at this time for the required massive infrastructural development “, he said.
He however called on stringent oversight functions by the standing committees of the Senate on internal revenue generation for funding of the 2022 budget.
With approval of the 2022 – 2024 MTEF/FSP documents by both chambers of the National Assembly as forwarded to it by President Muhammadu Buhari, the stage is certainly set for presentation of the 2022 budget estimates.
Whether the expenditure profile of the estimates will be N13.89 trillion as indicated in the MTEF document or not, will be known when the President comes up with the 2022 Appropriation bill.
