The Federal Government yesterday presented the medium-term expenditure framework and fiscal strategy paper (MTEF/FSP) where it proposed a total budget of N9.78trn for 2020.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, who made the presentation also proposed a budget of N10.1trn for 2021 and N10.4trn for 2022.
The crude oil benchmark for 2019 budget is put at $60pb whilst for 2020-2022 is reduced to $55pb with the oil production benchmark put at 2.18m barrels per day.
Mrs. Zainab Ahmed also noted that “the 2020 to 2022 fiscal years will be very challenging with respect to revenue generation and rapid growth in personnel costs” thus, the states would be adversely impacted.
The minister said “oil revenue is projected to decline from N3.688trn in 2019 to N2.367trn in 2020.
This is due to lower production and lower oil prices” she said. But she however noted that FG will get more dividends from NLNG of up to about three folds.
She also tipped non-oil revenue to grow marginally. Non-oil revenue is also increasing the N1.409trn in 2012, to over N1.55trn in 2020 she said.
Speaking on the government borrowing, she said that hasn’t waned and the FG hasn’t hit the red flags. “New borrowing is put at N1.605trn for 2019, projected at N1.7trn for 2020, N1.6trn for 2021 and N1.3trn for 2020.
The borrowings will be 50 percent local and 50 percent foreign” she said. Based on the borrowings, she confirmed the debt servicing obligations have also risen significantly.
The minister said all ministries, departments and agencies not on the Integrated Payroll and Personnel Information System (IPPIS) will not get paid as from October 2019 until they are able to do so.
On 2019 capital expenditure she said “the aggregate capital expenditure in 2019 was N3.187trn but in 2020, it has been lowered to N2.05trn and the next years, the pattern will be the same thing.”
She said the total fiscal deficit for 2019 is N2.474trn, in 2020 it will reduce to N2.154trn. The deficit to GDP is 1.77 percent in 2019.
Meanwhile, the federal government said it will effective September 2019 begin the deductions from state revenues the bailout monies given to them in 2015 and 2016. The Central Bank of Nigeria (CBN) had under the instruction of President Muhammadu Buhari given about N641bn to 35 states to pay backlog of salaries.
All the states that benefited got at least N17.5bn. The bailout has a 20-year repayment tenor for all states, except Ogun State, which opted for a 10 year tenor, according to a CBN statement at the time. It is not clear if this has been reviewed.
Mrs. Ahmed had previously told journalists that the FG had set up a committee to recover the N614bn. Based on the 20 year tenure, each state would be debited at least N73m every month from their federal allocations in the next 20 years to offset the debts.
“So the recovery process for us is to deduct from the FAAC allocation to the states and then we remit to the CBN and we are going to start this remittances by the next FAAC (September 2019), she said.