Deji Elumoye in Abuja
The Debt Management Office (DMO) has put the revised 2020 budget deficit of the federal government at N4.5 trillion.
This is just as the Minister of Finance, Budget and National Planning, Zainab Ahmed, hinted of a looming recession in the country.
The Director-General of the Debt Management Office, Mrs. Patience Oniah, told the Senate Committee on Foreign and Local Debts that deficit financing of the revised N10 .509 trillion 2020 budget would rose from N2.18 trillion to N4.56trillion.
Onah saod the deficit would be financed through domestic borrowing of N2,188.880 trillion and external borrowing of N1.984.680 trillion, making a total of N4.173.560trillion.
Her words: “The revision of the 2020 budget became necessary due to the effects of COVID-19 on Nigeria’s revenues and the need for new (previously unbudgeted) spending on health to meet the health challenges occasioned by COVID-19.
“The subsisting 2020 Appropriation Act had a total expenditure of N10.594 trillion and a Deficit of N2.175 trillion to be part financed through new domestic borrowing of N744.98 billion and new external borrowing of N850 billion.
“The N850 billion new external borrowing, which was to be raised through Eurobonds has been converted, with the approval of the National Assembly, to domestic borrowing due to lack of access to the International Capital Market at this time. Thus, the total new borrowing, which is all domestic, is N1.594 trillion.
“The proposed new domestic borrowing of N2,188.83 trillion will be raised from the domestic market through the issuance of Federal Government of Nigeria Bonds (FGN Bonds), FGN Savings Bonds, Sukuk, Nigerian Treasury Bills and possibly, a Green Bond.
“As at May 29, 2020, a total of N1.319.99 trillion had been raised. There is also an on-going offer for a Sukuk of N150 billion.”
She said the DMO is expected to raise the balance of N868.89 billion, which is N2.188billion less the N1.319billion in the course of 2020.
At another budget defence session held by the Senate Committee on Finance with heads of the nation’s revenues generating agencies on revised 2020-2022 Medium Term Expenditure Framework ( MTEF) and Fiscal Strategy Paper ( FSP), separate presentations made by heads of the revenue generating agencies showed that earlier targeted revenues from all the relevant agencies have been drastically slashed in the new proposals.
Besides, 77 per cent of the newly proposed revenues from the various sources like the Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS), Nigerian Customs Service (NCS) etc., is for debt serving.
Specifically, the Minister of Finance in her response to a question on the likelihood of recession said: “Very clearly the Gross Domestic Product (GDP ) has been reduced because of the economic crisis that we found ourselves in. But Nigeria is not alone in this.
“The global economy is predicted to also slip into recession. What we are hoping to do by our own collective efforts – the executive and the National Assembly – is that we minimise how far we go into recession.
“National Bureau of Statistics (NBS), has made an assessment that we will go into recession to the level of four per cent. Some of the work that the executive is doing is preparing a stimulus package as remedy, so that if it happens maybe we are going into 0.5 per cent or one per cent not going much lower. That is our unfortunate reality and the reality of the global economy.”
Under the reversed revenue projection, the NCS slashed its projection from N1.5trillion to N950billion; The FIRS from N463billion to N200billion and the NNPC from N1.222trillion to N484billion.
However, the Chairman of the Senate Committee, Senator Solomon Adeola, in his closing remarks after the session, said some of the new proposals might not be adopted as requested.
Adeola said: “Having listened with rapt attention to all presentations made by the Minister for Budget and National Planning and the questions asked regarding the MTEF and FSP, I believed that members of the committee are satisfied with reasons being offered by the minister on why we have to go this direction at this point in time.
“But, Honourable Minister, we are still waiting for that economic stimulus grand document by the committee headed by the Vice-President of the Federal Republic of Nigeria, because what that documents intends to do is to keep the economy going aftermath of COVID-19 .
“Secondly all related documents, which we have requested as a committee, ranging from the special accounts to the deficit document as explained by the Director General of the Budget Office, is expected to get to us in no distant future.
“Also on the issue of the Stamp Duty, yes, the senate is to investigate the Stamp Duty Account with the Central Bank of Nigeria, that motion has been passed by the senate for the Committee on Finance to investigate and we will not hesitate to investigate because there is need for us to get to the root of this matter regarding the cashless transaction.
“For the FIRS, yes, there is a proposal that about one hundred and something billion should be removed from your budget of N1.8 trillion under the company income tax. But I am happy to announce to you that we are not going to reduce it and that it is expected that you bring in the money,” Adeola said.