2020 Budget Review: FG Proposes 20 Per Cent Cut In Capital Expenditure

The Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed on Wednesday disclosed plans to formally present a revised 2020 national budget as well as the Medium-Term Expenditure Framework (MTEF)/Fiscal Strategy Paper (FSP) to the National Assembly.

She disclosed this at a meeting attended by the Senate President, Senator Ahmad Lawan and Speaker of the House of Representatives, Honourable Femi Gbajabiamila.

Ahmed said: “As we move to adjust the Budget and implement the N500 billion stimulus package, the President has set up a committee chaired by the Vice President which will be meeting today at 2 pm.

“The feedback we get from that meeting would be conveyed to the relevant bodies as we design the various programmes which will include the upgrade of healthcare facilities, support to States, Public Works and other interventions that we are working on at this time.”

Details of the proposed review to the 2020 budget review which was discussed behind closed doors include: provisions for the total sum of N250 billion intervention fund for COVID-19 with the sum of N100 billion provided for under ‘Other Service Wide Votes (COVID-19 crisis intervention fund)’ and additional sum of N150 billion ‘COVID-19 crisis intervention fund – incremental capital’ under the aggregate capital expenditure.

The adjustments

In line with current economic realities, the proposed review showed reduction of total recurrent expenditure from N4.493 trillion to N4.468 trillion, with reduction of personnel cost (MDAs) from N4.843 trillion to N4.738 trillion.

The sum of N350 billion approved for special interventions (recurrent) was also reduced to N270.753 billion; top 10 GOEs capital expenditure was reduced from N188.227 billion to N141.170 billion; MDAs capital expenditure reduced from N1.564 trillion to N1.351 trillion.

According to the documents seen by Nigerian Tribune, the 2.18 mbpd volume oil production was reduced to 1.7 mbpd; oil price benchmark was also reduced from 57 dollars to 30 dollars per barrel while average exchange rate was increased from N305/dollar to N360/dollar.

Under the statutory transfer however, Federal Government retained the Appropriations of N128 billion for National Assembly; N110 billion for National Judicial Council; N4 billion for Independent National Electoral Commission; N4.7 billion for Public Complaint Commission; N2.5 billion for Human Rights Commission.

But the budget for Niger Delta Development Commission was reduced from N80.882 billion to N29.522 billion; North East Development Commission’s budget reduced from N38.102 billion to N14.079 billion; Universal basic Education Commission’s budget reduced from N111.789 billion to N61.024 billion while Basic Health Care Fund’s budget was reduced from N44.498 billion to N17.981 billion.

Federal Government’s share of oil revenue, share of NLNG dividends, share of minerals & mining, non-oil among others were reduced from N7.866 trillion to N4.534 trillion.

Under the redistributable Federal Government’s share of the Federation Account (52.68 per cent) was reduced from N4.516 trillion to N1.648 trillion; deductions was reduced from N214.291 billion to N78.216 billion; Net Federal Government share of Federation Account (48.5 per cent) was reduced from N4.157 trillion to N1.517 trillion while the net ecological and derivation (after 10 per cent Transfer to NEDC) was reduced from N77.145 billion to N28.158 billion.

The document also showed reduction in the Federal Government share of Value Added Tax (15 per cent) from N313.472 billion to N300.732 billion; FCT 1 per cent reduced from N20.898 billion to N20.683 billion while Net Federal Government share of VAT pool account (14 per cent) was reduced from N292.573 billion to N280.683 billion.

Similarly, the projected income of N463.946 billion stamp duty was reduced to N200 billion while Signature bonus/renewals/early renewals reduced from N939.300 billion to N568.682 billion.

However, the Grants and Donor funding was increased from N36.393 billion to N42.955 billion.

The reviewed budget also showed 20 per cent reduction in major capital expenditures of Ministries, Departments and Agencies (MDAs) worth N312.821 billion.

For the Debt servicing, Federal Government retained the N2.453 trillion approved for domestic and foreign debts respectively for the year ending 31st December 2020.

The fiscal deficit (excluding GOEs and Project tied loans) increased from N1.847 trillion to N4.849 trillion (Deficit/GDP rose from 1.29 per cent – 3.43 per cent), while total fiscal deficit (including GEOs and Project tied loans) rose from N2.175 trillion to N5.190 trillion (Deficit/GDP rose from 1.52 per cent – 3.67 per cent)

The breakdown of the reduction include: N3.085 billion from anniversaries/celebrations; N24.869 billion from construction /provision of office buildings; N10.813 billion from Monitoring /evaluation; N5.258 billion from purchase of motor vehicles; N3.946 billion from purchase of office furniture and fittings; N1.904 billion from purchase of computers; N49.530 billion from rehabilitation/repairs of office buildings; N1.080 billion from rehabilitation/repairs of residential buildings; N45.613 billion from research & development; N1.967 billion from construction / provision of roads; among others.

Gbajabiamila on all-inclusive relief package for Nigerians

Speaking during the interactive session, Speaker Femi Gbajabiamila emphasised the need for provision of an all-inclusive relief package for Nigerians by government, arising from the effects of the COVID-19 crisis.

Gbajabiamila said one of the most effective means of alleviating the financial burden of the stay-at-home order to prevent the spread of the virus is for the government to give a 100 percent waiver on the electricity consumed by every household in the country.

In a statement by his Special Adviser on Media and Publicity, Lanre Lasisi, the Speaker, however, noted that without the cooperation and collaboration between the Executive and the Legislature, such laudable idea may be impossible to achieve.

In his opening remarks at the meeting, the President of the Senate, Ahmad Lawan, explained that the meeting was critical so that the National Assembly would be adequately informed about the various proposed interventions, for it to be able to promote and support them with constitutional backing when the need arises.

While requesting the Minister of Petroleum Resources to update the leadership on the state of the nation’s crude oil, Senator Lawan said the Ministry of Finance and the Central Bank of Nigeria must, as a matter of necessity, streamline their stimulus packages in consonance with the national budget in order to avoid duplication of efforts.

In his remarks, Hon. Gbajabiamila restated the need for collaboration between the two arms of government for the benefit of Nigerians during these trying times.

He said: “We are indeed in an exciting time in Nigeria, and it is how we deal with and confront the problem that would determine how we end up.

“So, I’m waiting with bated breath and I’m anticipating the various packages and stimuli and how we intend to, as a government, deal with the times we find ourselves in.

“I look forward to listening to what is on ground, and I’m even looking forward to more input from the National Assembly when it is time for us to make an input.

“Because as it is often said, two heads are better than one, and we have one government. The National Assembly will not act unilaterally neither will the executive. We will work together for the best outcomes for the people whom we serve.”

The Speaker noted that the entirety of Nigerians should be the focus of whatever stimulus package and actions for the aftermath of the crisis period, which he said should be treated with every sense of purpose.

According to him, a stimulus package that takes care of a large part of the populace should be at the front burner of government’s intervention programmes at this time.

He said: “I’m looking forward to a robust package, that will include succour to the Nigerian people, that is the issue of electricity. Just for two months.

“I had this argument with somebody the other day and he failed to see something until I pointed it out to him that if an average man, and for argument sake, pays N10,000 for electricity in a month, and you tell him that government will subsidize your electricity 100 per cent, that we have the guarantees and undertakings by the DisCos and GenCos that your electricity supply will not flicker for a moment for two months.

“Do you know what you’ve done invariably? You’ve loosened that N10,000, you freed up that N10,000 for him to do other things with.

“In other words, the government has given him N10,000, which we all know what people are asking for right now. By saving him the N10,000 on his electricity bill, the government has given him N10,000.

“Unfortunately, we have to do it by way of comparison, we know what Ghana, next door has just done.

“I’m sure it’s in your (Executive) package and that’s why I said I’m excited and if that is the only contribution that the National Assembly has to make in terms of the stimulus, I think we should consider it.

“And that is why it is not a unilateral decision of either the executive or the legislature. It has to be a symbiotic relationship, we work together for the best outcome for the Nigerian people.

“There’s a lot more ground to cover and if we work together we will be able to cover as much ground as we possibly can.”