The federal government of Nigeria has proposed a sum of N9.12 trillion as the budget estimate for next year, 2020, an amount slightly higher than N8.92 trillion budget of 2019.
This is contained in the 2020 -2022 Medium Term Expenditure Framework and Fiscal Strategy recently disclosed by the Zainab Ahmed, minister of finance, and finally sent to the National Assembly by president Muhammadu Buhari on Wednesday.
Details of the document shows that the FG targets N7.17tn revenue which it intends to generate from Value Added Tax (VAT) and other revenue to finance the 2020 appropriation alongside a deficit of about N2.28 trillion.
The document states that N34.2 percent of the projection would come from oil sources while the balance would be earned from non-oil sources.
The document indicates that the expected revenue projection is N170.41 billion higher than that of 2019 which stood at N6.99 trillion, stating also that the expenditure would include grants and donor funding of N36.39 billion.
Meanwhile, reports show that the government intends to spend a total of N3.257 trillion on overheads containing N2.67 trillion and N586.72 billion on personnel and pension costs respectively.
Part of the document reads: “Interest payment on debt is estimated at N0.45 trillion while provision for sinking fund to retire maturing bonds to local contractors at N296 billion.
“In addition, N40.17 billion, representing one percent of the consolidated revenue fund, has been earmarked for the Basic Health Care Provision, N22.73 billion for GAV/Routine Immunisation in the Services Wide Votes and N89.44 percent for the power reform programme.”
Meanwhile, the 2020 appropriation bill states that only the sum of N1.01 trillion, exclusive of capital in statutory transfers, is available as amount for ministries, departments and agencies (MDAs) as capital expenditure.
The further clarifies that this is the with the inclusion of capital statutory transfers, capital supplementation, grants and donor funded projects, as well as multi-lateral/bilateral projects-tied loans of N328.13 billion and the capital expenditure amounting to N2.17 trillion.
The document further states: “with the inclusion of the planned expenditure of the top 10 GOEs of N553.14 billion, the proposed aggregate expenditure rises to an estimate of N10 trillion. With the inclusion of GOEs capital estimated at N188.23 billion, aggregate capital expenditure (inclusive of capital in statutory transfers) is estimated at N2.17 trillion).
“This represents 22 per cent of the aggregate projected Federal Government expenditure in 2020, which falls shorts of the 30 per cent target in the ERGP. This is the consequence of the slower growth in revenues than the rate of the growth in non-discretionary recurrent expenditures, specifically debt services and personnel costs.”
The MTEF also shows that due to the projected revenue and planned expenditure, the fiscal deficit is estimated at N1.95 trillion, about 33.61 billion or 1.8 percent more than the estimate of N1.92 trillion budgeted in 2019.
“This level of deficit is 1. 37 percent of GDP well below the threshold (3% of GDP) stipulated in the Fiscal Responsibility Act (FRA) 2007. In order to present a more comprehensive picture of the FGN’s fiscal operations, the revenues and expenditures of the top 10 GOEs as well as expenditures of financed from project-tied loans will be captured in the FGN’s budget,” it reads.
Accordingly, the aggregate fiscal deficit for 2020 will be N2.28 trillion, which is 1.59 per cent of GDP still within the three percent threshold, the statement states.
Meanwhile, the President has urged the lawmakers to accord the appropriation bill with urgent legislative action.
President Buhari stated this is a letter attached to the document and read at the plenary by Senate President Ahmad Lawan on Wednesday.