Nigeria Proposes 10.33 Trillion Budget For 2020, Pegs Crude Oil Benchmark At $57 Per Barrel

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The Nigerian Government has proposed a N10.33 trillion budget for the 2020 financial year with a determination to revert to the January to December budget circle in 2020.

 

The 2020 budget of N10.33 trillion is an increase of N1.414 billion compared to the N8.916 trillion of 2019.

 

Addressing a joint session of the National Assembly, on Tuesday, Nigerian President Muhammadu Buhari said the 2020 budget which will consolidate on the performance of the 2019 budget pegs crude il benchmark at US$57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per United States (US) dollar.

 

He said “an aggregate expenditure of N10.33 trillion is proposed for the Federal Government in 2020. The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers). Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion. 

In the 2020 budget Works and Housing takes a whooping N262 billion with Power getting N127 billion while Transportation is allocated N123 billion.

Universal Basic Education Commission has N112 billion; Defence N100 billion; Zonal Intervention Projects N100 billion; Agriculture and Rural Development N83 billion; Water Resources N82 billion; Niger Delta Development Commission N81 billion;Education N48 billion; Health N46 billion; Industry, Trade and Investment N40 billion;North East Development Commission N38 billion; Interior N35 billion; Social Investment Programmes N30 billion; Federal Capital Territory N28 billion; and Niger Delta Affairs Ministry N24 billion.

The president said the sum of N556.7 billion provided for Statutory Transfers in the 2020 Budget and includes: N125 billion for the National Assembly; N110 billion for the Judiciary; N37.83 billion for the North East Development Commission (NEDC); N44.5 billion for the Basic Health Care Provision Fund (BHCPF); N111.79 billion for the Universal Basic Education Commission (UBEC); and N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

He disclosed that the non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019 stressing that “This increase reflects the new minimum wage as well as our proposals to improve remuneration and welfare of our Police and Armed Forces. You will all agree that Good Governance, Inclusive Growth and Collective Prosperity can only be sustained in an environment of peace and security”.

President Buhari stressed that the government’s fiscal reforms “shall introduce new performance management frameworks to regulate the cost to revenue ratios for Government Owned Enterprises, which shall come under significant scrutiny. We will reward exceptional revenue and cost management performance, while severe consequences will attend failures to achieve agreed revenue targets”.

He emphasised that  “although the 2020 capital budget is N721.33 billion (or 23 percent) lower than the 2019 budget provision of N3.18 trillion, it is still higher than the actual and projected capital expenditure outturns for both the 2018 and 2019 fiscal years, respectively. However, at 24 percent of aggregate projected expenditure, the 2020 provision falls significantly short of the 30 percent target in the Economic Recovery and Growth Plan (ERGP) 2017-2020”.

The President said the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) “set out the parameters for the 2020 Budget. We have adopted a conservative oil price benchmark of US$57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020”.

Speaking further on the budget proposal the president said “We expect enhanced real GDP growth of 2.93% in 2020, driven largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves. However, inflation is expected to remain slightly above single digits in 2020”.

The budget President Buhari noted is designed to “strengthen the macroeconomic environment with emphasis on; investing in critical infrastructure, human capital development and enabling institutions, especially in key job creating sectors; Incentivising private sector investment essential to complement the Government’s development plans, policies and programmes; and Enhancing our social investment programs to further deepen their impact on those marginalised and most vulnerable Nigerians”.

Despite the opposition to the increase in Value Added Tax (VAT), the president revealed that “the draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate. The additional revenues will be used to fund health, education and infrastructure programmes. As the States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well”.

While commending the national assembly leadership patriotism and cooperation with the executive, President Buhari said “as you review the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), as well as the 2020 Budget estimates, we believe that the legislative process will be quick, so as to restore the country to the January-December financial year”.

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