The Federal Government, through the Budget Office of the Federation on Wednesday, said it had released N400 billion for capital expenditure from the 2020 financial plan, while the recurrent aspect was being implemented as well.
The minister of finance, Zainab Ahmed, also disclosed this while briefing State House correspondents after the weekly Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari.
The minister expressed concern over the dwindling revenue from crude oil sales, saying, “We are concerned in the current drop in oil price because it is now below our budget”.
BusinessDay’s checks reveal that issues around infrastructure, aviation and implementation of the 2020 budget featured prominently at the weekly FEC meeting.
Inside cabinet sources had informed BusinessDay that efforts would continue this week to rejig strategies for implementation of the budget following the high volatility in the world crude oil market.
Meanwhile, Nigeria’s President Muhammadu Buhari approved a record N10.59 trillion ($34.6bn) budget for 2020 on December 2019. The Africa’s largest economy is planning to do a media budget review in July where all of the assumptions will be revisited, including the growth assumption.
Also in the plans of the government is to revise the benchmark oil price if the $57 per barrel is not sustainable.
Following the outbreak of coronavirus in China, oil price (Brent crude) has fallen to as low as $52.18 per barrel on Wednesday, from a peak of $68/barrel in January 2020, which is below the $57/ barrel budget benchmark of the Nigerian government.
“Indeed, the reduction in oil price on account of the coronavirus is a source of concern,” Ben Akabueze, director-general, Budget Office of the Federation, said on the side-line at the ongoing National Assembly/Budget Office retreat/workshop on budget process in Lagos.
Analysts admit that lower oil prices will also impact the 2020 budget, which was based on 2.18 million bpd production at an oil price benchmark of $57 per barrel.
Akabueze expects the coronavirus issue to abate shortly, “But we intend to do a media budget review; we are going to revaluate and if it seems like for the rest of the year the $57 per barrel benchmark price is not sustainable, we will revise that”.
What this means is that if the country could not find any alternative revenue sources to make up for the shortfall it would then also have to revise downward the expenditure projections.
Responding to the fiscal authorities plans to contain the effect of the Covid 19, he said, “Whatever resources are required by the health authorities including emergency funding to be able to respond have been made available”.
In his welcome address, Clem Agba, minister of state, budget and national planning, said the reason for the retreat was to meet with members of the appropriation committee and also committee chairman of other relevant committees in the National Assembly to look at the appropriation process and to have a deeper and better understanding of it.
He said it was also meant to foster a good working relationship between the executive and members of the National Assembly.
“You could see what happened in 2020 budget, what collaboration could do. For the first time in 20 years, that we are having a budget running from January to December,” Agba said.
Speaking with BusinessDay at the workshop, Neil Cole, executive secretary, Collaborative Africa Budget Reform Initiative (CABRI), said it was important for any country to recognise the main sources of the budget revenue, saying, “In the case of Nigeria and also other countries where you have a single commodity economy that awareness helps you with your planning”.
Cole encouraged Nigeria to look at how it can diversify not only its economy but also the sources of budget revenue.
“In our work that we have been doing in Nigeria we see that there has been an improvement in the preparation of the budget and tabling of the budget in the National Assembly,” Cole said.
