Abuja- The federal government has estimated the total sum of N9.12 trillion for the 2020 budget.
It however, disclosed that it is expecting to raise the sum of N7.72 trillion from revenues to fund the total budget, making the budget to suffer a deficit of N2.28 trillion if approved by the National Assembly.
According to the the Medium Term expenditure Framework and Fiscal Strategy Paper (MTEF) and the Fiscal Strategy Paper (FSP) documents made available to newsmen after about nine hours after the letter of President Muhammadu Buhari to that effect was read on the floor of the Senate, the federal government would fund the deficit of N2.28 trillion from borrowing.
According to the MTEF document: “The FGN’s expenditure budget is estimated at N9.12 trillion (this includes grants and donor funds of N36.39 billion). This is slightly higher than the 2019 of N8.92 trillion”
“Interest payments on debt is estimated at N245 trillion and while provision for Sinking Fund to retire mating bonds to local contractors is N296 billion. The provisions for personnel cost and pension costs are est’mated at N267 trillion and N536.72 billion respectively.
In addition, N40.17 billion (representing 1% of the consolidated revenue fund) has been earmarked for the Basic Heatth Care Provision Fund (BHCPF), N22.73 billion for GAVI/Routine immunization in the service-wide votes (SWV), and N89.44 billion for the power sector reform programmer.
“With these provisions, only the sum of N101 trillion (exclusive of capital in statutory transfers) is available as amount for Ministries, Department and Agencies (MDAs) capital expenditure. With the inclusion of capital in statutory transfers, capital supplementation, and grant and donor funded projects, as well as Multilateral, Bilateral project-tied loans of N328.13 billion, the capital expenditure amounts to N2.17 trillion.
“Wth the inclusion of the planned expenditure of the top 10 government owned enterprises of N553.14 billion, the proposed aggregate expenditure rises to an estimate of N10.00 trillion. With the inclusion of the GOES capital estimated at N18823 billion, aggregate capital expenditure (inclusive of capital in statutory transfers) is estimated at N2.17 trillion.”
“This represents 22% of the aggregate projected Federal Government expenditure in 2020, which falls short of the 30% target in the ERGP. This is the consequence of the slower growth in revenues than the rate of growth in non-discretionary recurrent expenditures. specifically debt service and personnel cost.”
Explaining how the deficit would be funded, the document said, “the deficit will largely be financed by new borrowings estimated at N1.70 trillion while about N252.08 billion will be derived from Privatization Proceeds, and N328.13 billion are loans secured for specific development projects.”
On the sources of funding for the budget, the MTEF document stated that “from the share Of the Federation Account and VAT as well as other revenues, the aggregate revenue available to fund the 2020 budget is projected at N7.17 trillion (2.4% or N170.41 billion more than the 2019 Budget of N699 trillion).
“34.2% of this is projected to come from oil sources while the balance is to be earned from non-oil sources. When the retained revenues of the ten major Government-Owned Enterprises (GOES) are considered the aggregate FGN revenue is projected at N772 trillion.”
The MTEF document further reads that “given the projected revenue and planned expenditure, the Fiscal deficit is estimated at N1.95 trillion, about N33.61 billion (1.8%) more than the estimate of N1.92 trillion in 2019. This level of deficit is 1.37% 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 financed from project-tied loans will be captured in the FGN’s budget.
“Accordingly, the aggregate fiscal deficit for 2020 will be N2. 28 trillion which is 1.59% of GDP, still within the 3% threshold.”
The President of the Senate, Ahmad Lawan had during the plenary on Wednesday read a letter signed by President Muhammadu Buhari and dated 24 September, 2019 announcing that the MTEF document has been sent to the upper legislative chamber.
The letter reads: “It is with pleasure that I hereby submit the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) to the Senate.
“Let me use this medium to express my gratitude for the much improved partnership between the legislative and the executive arms of the federal government in our goal of making the budget process deliver better outcomes for the Nigerian people in particular.”
“I note with further appreciation, the commitment and support that Distinguished senators have continued to demonstrate. Pursuant to the provision of the fiscal responsibility Act 2007,the preparation towards the submission of the 2020 budget to the National Assembly is progressing well.”
“The MTEF/FSP was prepared taking into account, key development of the global and domestic environments. We have endeavoured to ensure that predicted revenues are realistic, but also reasonably challenging in the face of our significantly constrained fiscal space.”
“Planned spending has been set at prudent and sustainable levels consistent with governments overall developmental objectives as set out in the Economic Recovery and Growth Plan (ERGP).”
“Given our shared objective of returning the budget to a predictable January – December fiscal year, with effect from 2020, I hereby forward the 2020/2022 FSP to the Distinguished Senate and trust that it would be extensively considered in order to facilitate the 2020 MTEF budget preparation.”