•Targets N7.9tn revenue, 1.86m bpd oil output, N4.48tn deficit
By Omololu Ogunmade
The Federal Executive Council (FEC) yesterday proposed a N13.08 trillion budget for 2021 fiscal year ahead of its presentation to the National Assembly next week by President Muhammadu Buhari.
Briefing reporters after the weekly virtual FEC meeting in the State House, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the budget estimate comprises a capital expenditure of 29 per cent of the total budget.
The minister, who did not disclose the capital and recurrent budget figures, explained that the 29 per cent capital budget projection in the budget is higher than the 24 per cent projection in 2020 budget, but lower than the initial target of 30 per cent.
The minister has also predicted that the Nigerian economy would recover in early 2021.
According to her, the budget proposal is predicated on $379 exchange rate, oil benchmark of $40 barrel per day, oil production volume of 1.86 million barrels per day (bpd), including 400,000 barrels per day of condensates, Gross Domestic Product (GDP) growth of three per cent and 11.95 per cent inflation rate.
The minister, who said the budget would run on N4.48 trillion deficit, put the revenue target in the fiscal year at N7.9 trillion, adding that unlike the previous proposals which only accommodated 10 government enterprises, the 2021 budget comprises the budgets of 60 government enterprises.
She said all the government enterprises, only the Nigerian National Petroleum Corporation (NNPC) and the Central Bank of Nigeria (CBN) were left out of the budget because they are independent government enterprises.
The minister also said government’s design in the budget is to achieve inclusive growth and key objectives of the government such as creating jobs, stimulating the economy and boosting manufacturing, among others.
Ahmed said the government is optimistic that the Nigerian economy would recover in early 2021.
According to her, the budget deficit of 4.489 trillion represents 3.64 percent which she said was slightly above the provision in the Fiscal Responsibility Act.
“The total budget proposal that is made for 2021 is to enable us to attain a more inclusive growth and also to achieve the key objectives of government, which include stimulating the economy, creating jobs, enhancing growth and creating infrastructural investment, also promoting manufacturing and local production.
“The budget assumptions that were presented to council today include: Crude oil price benchmark at $40 per barrel; oil production at 1.86 million barrels per day; exchange rate of N379 to $1, GDP growth target of three per cent and inflation rate of 11.95 per cent.
“We do expect that Nigeria’s economy will recover to the path of growth early in 2021. So, the total aggregate revenue that is projected for the 2021 budget is N7.89 trillion and what is unique about the 2021 budget is that we have brought in the budgets of 60 government-owned enterprises. If you recall, in 2020, we brought in 10. Now, we have brought in 60.
“These 60 exclude NNPC and the Central Bank and the reason being that NNPC, a national oil company and international national oil companies are not included in the national budget. Also, the CBN is an autonomous body. Only those two are excluded. Sixty government-owned enterprises are included. That is to say their revenues and all categories of expenditure are now integrated in the budget.
“We have total aggregate revenue of N7.89 trillion and also an aggregate expenditure of N13.08 trillion for 2021. There’s a fiscal deficit of N4.489 trillion. This represents 3.64 per cent slightly above what is required by the Fiscal Responsibility Act of three per cent and also to report that the total capital expenditure that is projected in the budget is 29 per cent of the aggregate expenditure.
“This is an improvement over the 24 per cent that we had in the 2020 budget, but slightly below the 30 per cent that we targeted in the economic recovery. Just to clarify that the 1.86 million barrels per day crude oil production includes 400,000 barrels per day of condensates. So, we have complied with the OPEC (Organisation of Petroleum Exporting Countries) quota, which is placed at about 1.5 million barrels per day. So, the 1.46 million barrels per day is in meeting with the OPEC quota.
“This is important to us because as you report, if you just report the 1.86 million barrels per day, some members of the OPEC appear to think that we are exceeding OPEC quota, whereas we are reporting oil and condensate,” she said.
The minister said before presenting the proposal to the council, she first presented the performance of the 2020 budget, which she put at 68 per cent, adding that the performance of the recurrent expenditure is 92.3 per cent.
“Just briefly, the performance of the Federal Government of Nigeria budget as at July, for revenue, was 68 per cent. We had a 68 per cent revenue performance prorated to July. The performance of expenditure, on the other hand, was 92.3 per cent and that is to say salaries were fully paid; pensions were paid; debt service was made, as well as transfers classified as statutory.”
She added: “In presenting the budget 2020, we had to report to council some slight changes that need to be made on (Medium Term Expenditure Framework) MTEF 2021-2023, which has since July been sent to the National Assembly by Mr. President. “Specifically, the exchange rate is going to be changed from N360 that we initially presented and submitted to council and to the National Assembly, up to N379.
The reason why this is happening is due to the exchange rate movement that the CBN has put in place.”
Asked if the projected GDP growth rate of three per cent was not rather too ambitious, the Minister of State for Budget and National Planning, Mr. Clement Agba, said: “You talked about the growth rate to be very ambitious, first, we have to use modern approach and this is done by (National Bureau of Statistics) NBS. When you consider the economic sustainability plan which is also going to run for another six months next year, remember we have the N2.3 trillion stimuli (package).
“The economy too has also now been opened. The lockdowns have been lifted; economic activities have picked up and we have also selected some sectors in the economy that we are putting in a lot of money that will create activities and hence, the multiplier effect of it.”