•Proposes N12.66tn budget for 2021
Deji Elumoye and Udora Orizu in Abuja
President Muhammadu Buhari has sent the 2021-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate and the House of Representatives for approval.
The MTEF/FSP document included N12.66 trillion budget estimate for 2021 and an estimated N5.16 trillion budget deficit for the fiscal year.
The MTEF/FSP document was accompanied with a letter read at plenary yesterday by the President of the Senate, Dr. Ahmad Lawan.
The letter read in part: “It is with pleasure that I forward the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for the kind consideration and approval of the Distinguished Senate.
“Let me seize this opportunity to express my deep gratitude for the cooperation, support and commitment of the leadership and distinguished members of the Senate in our collective efforts to sustain the restoration of the January-December financial year.
“In line with our commitment, we have worked very hard to achieve an earlier submission of the MTEF/FSP. This is to allow the National Assembly enough time to perform its important constitutional duty of reviewing the framework.
“I herewith forward the 2021 – 2023 MTEF/FSP as the 2021 budget of the Federal Government will be prepared based on the parameters and fiscal assumptions of the approved 2021 – 2023 MTEF/FSP. I seek the cooperation of the National Assembly for expeditious legislative action on the submission.”
The federal government proposed N12.66 trillion as aggregate expenditure for 2021 fiscal year with a deficit of N5.16 trillion to be financed by total loan package of N4.28 trillion.
The proposal targets N481.41 billion as statutory transfers, N5.75 trillion as recurrent expenditure, N3.33 trillion as capital expenditure and N3.12 trillion earmarked for debt servicing.
Critical parameters and assumptions upon which the budget proposal are based as contained in the documents acknowledged by Lawan are $40 as oil price benchmark, 1.86 million barrels as oil production per day , and N360 to $1 as exchange rate.
Also included in the proposals are N500 billion as intervention fund to curb COVID-19 pandemic, N52 billion for Public Works Programme, N32.46 billion for Social Intervention Programme, N5 billion as bailout for the aviation sector and N60 billion for maintenance of roads through direct labour across the six geo- political zones etc.
Aside the N4.28 trillion, the federal government also targets N205.15 billion from privatisation proceeds to fund the budget.
Buhari, however, expressed concern over the effect of the pandemic on revenue target.
The document said the federal government was determined “to use innovative ways to raise revenues required for financing its expenditures and diversifying its revenue sources thereby increasing the revenue-to-GDP ratio. The medium term target for this remains 15 per cent.”
It noted that “higher revenue collections will enable government to effectively deliver public services, enhance infrastructure investment and mitigate the health and economic effects of the COVID-19 pandemic.”
The document added that the federal government has seized the initiative to confront the negative effect of parlous revenue generation on capital projects.
One of the measures in the fiscal policy is to increase oil revenues, through upfront fiscal deductions by the Nigerian National Petroleum Corporation for federally funded projects.
“The NNPC is taking measures to further reduce the cost of crude oil production to $10 per barrel or below by 2021.
“This will be achieved by reducing key cost drivers, including logistics, security and transportation. In addition, under-recovery costs by the NNPC in the course of importing petrol for the country has been eliminated with the recent elimination of subsidies in Premium Motor Spirit pricing. Other measures include accelerating licensing of marginal oilfields and renewals of existing licences as well as ramping up production from previously shutdown oil wells.”
In a similar letter to the House of Representatives, Buhari sought approval for the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper.
The Speaker of the House, Hon. Femi Gbajabiamila, read the president’s letter at the opening of plenary yesterday.
In the letter, the president said the reason for the early submission was to enable the legislature perform its constitutional duties.