The Federal Executive Council (FEC) Wednesday approved the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) with N12.66 trillion budget projection for each of the three fiscal years.
Briefing State House correspondents at the end of the weekly FEC meeting presided over by President Muhammadu Buhari which lasted over eight hours, Minister of State for Finance, Budget and National Planning, Mr Clement Agba, said other projections in the budget include $40 per barrel oil benchmark, oil production volume of 1.6 million barrel per day, inflation rate of 11.9 per cent, gross domestic growth rate of three percent and revenue target of N7.50 trillion.
The minister said the GDP projection at the end of 2020 fiscal year is expected to cruise at -4.42 percent and later improve to about -1.8 percent.
He said whereas the revenue target for 2020 budget is N5.84 trillion, it is projected to rise to N7.50 trillion in 2021 even though the projected oil production volume is lower compared to the earlier projection in 2020 budget as a result of quota restrictions by the Organisation of Petroleum Export Countries (OPEC).
He said 63 government-owned enterprises (GOEs) have been brought in “to get prices at par.
He said the GOEs have been drafted to raise another N2.17 trillion to fund the budget, adding that despite the N7.50 trillion budget projection for 2021 and the projected additional N2.17 trillion to be driven by the GOEs, the figures would eventually match the N12.66 trillion budget projection.
He said the budget deficit would be funded by a borrowing and repayment plan and sinking funds, stressing that the Debt Management Office (DMO) has the responsibility to properly guide the federal government on the borrowing plans.
“I spoke of the various assumptions that has been made in terms of parameters and those assumptions are what drives revenues that we get and in terms of how you are able to reflate the economy and spend helps your GDP.
“For Nigeria, it was projected that by the end of this year we should have the GDP top at -4.42 percent. However, with the stimulus if properly done and executed, we expect that the GDP will improve to about negative -1.8 percent.
“So in terms of the revenue projection, for 2020 it was N5.84 trillion but for 2021 we expect that it will be N7.50 trillion. Even though the oil production is much lower than our capacity, because we are restricted by the OPEC Plus quota in order to get the prices at par, we have brought in 63 Government Owned Enterprises(GOE).
“We are bringing them into the budget order to be able to sure up the budget by additional N2.17 trillion into the budget, hence we are saying we are projecting a larger budget size for 2021 over and above the N10.84 trillion for the revised 2020 budget.
“When you look at the N7.5 trillion and the expectations to spend N12 trillion, yes definitely there will be gap and that gap has to be financed.
“Is the plan for borrowing payment? Yes there is. Even in the 2020 budget we had provisions to repay debt and in the 2021 there is provision to repay debt. There is a sinking fund, we look at the ratio and ensure that we are able to pay our debts. Of course that is why we have the debt management office to run those numbers and advise us,” he said.