The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that the second wave of COVID-19 in Europe, is threatening oil price and the proposed 2021 budget.
She also said there was no plan to hike the Value Added Tax (VAT). The 2021 budget was predicated on $40 per barrel. But the current price of the crude oil in the market stands at $37.
Ahmed spoke on Thursday when she appeared before the Senate Committee on Finance chaired by Senator Solomon Adeola (APC Lagos West) to defend her ministry’s budget.
Adeola had sought to know the contingency plans of the Federal Government to insulate the budget from the shocks of falling oil price.
Replying, Ahmed said, “The actual projection was $40 per barrel and that is the average price that we projected to be for the year . Some of the institutions that are responsible for tracking price of crude oil, actually have crude oil price going as far as $50, $52 per barrel.
“We took the safer path. It seems the second wave of COVID-19 in Europe is affecting us. We are hoping to have clarity as to which direction to take in the next week or two.”
The minister, however, dismissed insinuations that the federal government might increase the Value Added Tax (VAT) again by 2.5% in 2021.
“As for the finance bill we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of of recovery – not only got but businesses as well,” she said.
The senate committee observed that all the heads of agencies appearing had been complaining of being underfunded and confronted the minister.
But the minister said the budget office could not go beyond the available resources.
“Every body is claiming scarce resources, but we can’t go beyond what is available,” she said.
The Director General, Budget Office, Ben Akabueze, in his explanation, said until the federal government got more revenue, no agency of government would get enough allocation.
The complaint was same for the Fiscal Responsibility Commission(FRC) who said it might not be able to pay staff salaries for November and December.
The minister informed the lawmakers that the situation was due to the global economic realities of COVID-19 and scare resources.
She said the office of the AGF was suffering the same fate because the Ministry of Finance could not be seen to be giving itself preferential treatment.
Ahmed said her ministry provided envelop for all the various MDAs; using some objective criteria and that it was left to them to prioritise their projects.
The minister however informed the lawmakers that a new Finance bill was on the way to the National Assembly; stating that it would not come with any increase in VAT or taxes.
“We have a finance bill ready. There will not be any increase of VAT or taxes. We see 2021 as year of recovery,” she reiterated.
