Revealed! When slashed 2020 budget ‘ll get to NASS

The federal government will next week, forward for approval by the National Assembly, drastically reduced proposals from the earlier passed  N10.59trillion 2020 budget .
This was disclosed Thursday, in Abuja by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed , during an interface with the leadership of the National Assembly.

Both the National Assembly and the presidency, had in December last year approved and signed into law , a total budget profile of N10.59trillion for 2020 fiscal year with $57 US dollar as oil price benchmark, 2.3million as projected oil production per day and N305 as official exchange rate of Naira to Dollar.
But the outbreak of Coronavirus Pandemic with attendant severe blows on economy projections , has made many projected revenues for funding the budget to be unrealisable.

Consequently, as submitted before the leadership of the National Assembly Thursday, the Finance Minister said the earlier proposed oil price benchmark of $57 per barrel , has been reduced to $25 per barrel due to rapid slides in the prices of crude in the international market.
According to her , as a result of the drastic drop in the oil price in the international market , earlier projected revenues of N8.419trillion of funding the budget , is now slashed to N5.548trillion  which is 34 percent (N2.87 trillion) lower than what was initially approved. 

 “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 said.
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.  

Federal government’s aggregate expenditure budget she explained, 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. 
She however said Debt Service provision was  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. 

The minister further said, “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.”
In his welcome address, the Senate President, Ahmad Lawan, told the executive arm of government to ensure that the interest of Nigerians remains protected in the proposed cut to the 2020 national budget. 

Lawan also expressed the willingness of the Federal lawmakers to expeditiously consider the proposed amendment to the 2020 budget which the Minister said would be presented to the National Assembly by next week. 
“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. 
“We have listened to the various adjustments you have made to avoid going into recession. However, to avoid going into a deeper recession, I think we need to do a little bit much more.
“After this meeting with the leadership, I suggest that you engage with our relevant committees in the Senate and House of Representatives to look at the nitty gritty that would be considered more in detail at the presentation level,” he said.
In his own  remarks, the Speaker of the House of Representatives, Femi Gbajabiamila, 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.”

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