Updated: Nigeria’s FEC okays N13.08trn budget for 2021

Nigeria’s Federal Executive Council (FEC) on Wednesday proposed a N13.08 trillion budget for the 2021 fiscal year with a deficit of N4.48 trillion.

Zainab Ahmed, Minister of Finance, Budget and National Planning, who disclosed this to State House Correspondents after the weekly virtual FEC meeting presided over by President Muhammadu Buhari, said the government also proposed oil benchmark of $40 per barrel at a daily production of 1.86 million barrel per day, including 400,000 of condensate for the 2021 budget.

The minister also said the capital expenditure for the year is projected at N2.083 trillion.

She said government is incorporating the budget of 50 government-owned enterprises into the 2021 budget. Already, 10 of such enterprises were incorporated into the 2020 budget.

The 2021 budget, expected to be transmitted to the National Assembly this month for passage, has a projected growth target of 3 percent, foreign exchange rate of N379/US dollar and inflation rate of 11.95 percent, Ahmed explained, saying the 2020 budget had a 68 percent revenue performance as at July.

“The performance of expenditure, on the other hand, was 92.3 percent and that is to say salaries were fully paid, pensions were paid, debt service was made, as well as transfers classified as statutory.

According to the minister, oil production is projected at 1.86mbpd, with an exchange rate of N379 to $1.

The gross domestic product (GDP) growth is projected at between 3 percent and 5 percent, while inflation rate is 11.95 percent, as well as a revenue projection of N7.89 trillion.

“What is unique about the 2021 budget is that we have brought in the budgets of 60 government-owned enterprises. If you recall, in 2020 we brought in 10, now we have brought it to 60.

“These 60 exclude NNPC and the Central Bank, and the reason being that the NNPC is a national oil company,” she said.

She explained that internationally national oil companies were not included in the national budget, saying, “Also, the CBN is an autonomous body. Only those two are excluded. That is to say their revenue and all categories of expenditure are now integrated in the budget.”

The government expects that Nigeria’s economy will recover to the path of growth early in 2021, so the total aggregate revenue projected for the 2021 can be realised, the minister said.

“We have total aggregate revenue of N7.89 trillion and also an aggregate expenditure of N13.08 trillion for 2021. The fiscal deficit of N4.489 trillion represents 3.64 percent, slightly above what is required by the Fiscal Responsibility Act of 3 percent, while the total capital expenditure that is projected in the budget is 29 percent of the aggregate expenditure.

“This is an improvement of over 24% of the 2020 budget, but slightly below the 30% that was targeted in the economic recovery projections,” she explained.

The minister said with the 1.86mbpd crude oil production, including 400,000 condensate, Nigeria had complied with the OPEC quota placed at about 1.5mbpd.

The explanation is important to Nigerians “because as you report, if you just report the 1.86mbpd, some members of the OPEC appear to think that we are exceeding OPEC quota, whereas we are reporting oil and condensate”, she said.

Minister of state for budget, Clement Agba, said the economy too had also now been opened, the lockdowns been lifted, economic activities had picked up and we have also selected some sectors in the economy that we are putting a lot money that would create activities and hence the multiplier effect of it.

“In terms of funding, like the minister mentioned, there is a deficit of financing of N4.486 trillion and we also expect that oil prices will be much more stable, Agba said, recalling that the revised 2020 budget was at $28 per barrel, “but now oil is averaging about $40 and we have used an exchange rate that is higher N379, benchmark of $40 per barrel and then the production is also much more better. So we expect to have more revenues to fund the budget.”

Ben Akabueze, director-general of Budget Office, noted that the overall budget implementation expenditure-wise, as of July was 92.3%.

“Debt service, personnel cost performed 100%. Capital budget as of that day has reached 60% performance and that is what then brought down the overall average to 92%.

“As of now, every agency of government has received at least 50% of their 2020 capital budget released to them. And indeed, despite the challenges of this year, this might be one year we won’t record the highest level of capital budget performance for a while. It is also reflective of the switch to implementing January to December fiscal year despite interruption of Covid-19.”