The Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed on Thursday 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.
This was revealed during a meeting of the Minister with the leadership of the National Assembly.
The National Assembly had in December, 2019, passed a budget of N10.59 trillion for the 2020 fiscal year. But the federal government recently resolved to amend the budget owing to the adverse effect of the COVID-19 pandemic.
Senate President, Ahmad Lawan and Speaker, Femi Gbajabiamila, as well as other principal officers of NASS attended the meeting on Thursday. Ezrel Tabiowo, Special Assistant on media to Lawan, stated in a statement.
Briefing the leadership, Ahmed said “the US$57 crude oil price benchmark approved in the 2020 budget is no longer sustainable.”
According to the minister, the budget amendment became “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 stated that the assumptions underpinning the 2020-2022 Medium Term Expenditure Framework (MTEF) and the 2020 Budget was revised due to global economic outlook and relevant domestic considerations.
According to Ahmed, crude oil benchmark price has been slashed from US$57 per barrel to US$25 per barrel while reducing crude oil production benchmark from 2.18 million barrels per day to 1.9 mbpd.
Also, She revealed 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 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.
“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,” Ahmed stated.
Disclosed further, the minister averred 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.
In his remarks, Senate President, Lawan admonished that in amending the National budget, the Executive arm of Government shod ensure that the interest of Nigerians remains protected in the proposed cut.
Lawan however, assured that expressed NASS will 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,” Lawan stated.
Also, 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.
“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,” he stated.
