Uche Usim, Abuja
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed on Friday disclosed that the Federal Government has proposed an aggregate expenditure of N11.86 trillion for 2021 fiscal year in the Medium Term Expenditure Framework & Fiscal Strategy Paper for 2021-2023 (MTEF & FSP).
The documents, unveiled virtually, show that the aggregate projected revenue for 2021 is N6.98 trillion and a deficit of N5.16 trillion.
The MTEF & FSP documents to be presented to the members of the Federal Executive Council (FEC) and members of the National Assembly at later dates, serve as the base for considering the 2021 fiscal budget.
Coincidentally, the presentation was made on a day President Muhammadu Buhari signed into law the revised 2020 budget for the country. The revised 2020 budget of N10.5 trillion has a reduction of oil benchmark price of $25 dollars per barrel from an initial price of $57 and revised crude oil production from 2.18 million to 1.94 million per day.
For next year, the MTEF document revealed that the government prepared the budget on a proposed $40/barrel crude oil benchmark, oil production at 1.86 million barrels per day and exchange rate of N360 to $1 and inflation rate of 11.95 percent.
According to the Minister, the draft 2021 – 2023 MTEF/FSP was being prepared against the backdrop of heightened global economic uncertainty.
She said: “The draft 2021-2023 Medium Term Fiscal Framework shows that there are continuing global challenges due to the COVID-19 pandemic. The medium-term outlook for Nigeria suggests that fiscal risks are somewhat elevated, largely due to COVID-19 related disruptions, which have exacerbated structural weaknesses in the economy. Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenues,” she said
On key assumptions of 20121 to 2023 MTEF Projections, the Minister said: “Oil GDP is expected to contract by 12.96% in 2020, year on year, causing an economy wide drag resulting in slower growth in non-oil GDP by -3.6%, year on year. Based on this, real GDP is expected to decline by 4. 2% in 2020. The nominal GDP is expected to increase from N130,836.1 billion in 2020 to N132,125.4 billion in 2021 and then up to N138,415.8 billion in 2023. Similarly, consumption expenditure is projected to stay flat at N118,735.2 billion in 2020 and N118,468.7 billion in 2021 and grow to N124,358.5 billion by 2023, reflecting a gradual steadiness in the recovery. Inflation, however, is expected to remain above single digit over the medium term, given the structural issues impacting on cost of doing business, including high cost of food distribution”.
The Minister of State for Finance, Budget and National Planning, Mr Clem Agba and the Director-General, Budget Office of Federation, Mr Ben Akabueze co-chaired the presentation with Mrs. Ahmed.
The Minister reiterated enormous revenue challenges facing the government, especially with the breakout of COVID-19, which has disrupted global supply chains and wrecking many economies.
To mitigate this, she said the government will explore all sources of revenue open to it including but not limited to all revenue generating agencies that must remit their surpluses to the consolidated revenue account.
She said the government was determined to deploy all resources and managerial expertise at her disposal to prevent the economy from sliding into recession.
She added: “in the event that we will go into recession, it would be a shallow recession.
“In 2021, we will reflect revenue and expenditure of all generating revenue agencies not just the top ten with exception of Nigeria National Petroleum Corporation (NNPC)”, she said.
On tackling the rising debt service, the Minister said the concern should be on generating more revenue to meet debt obligations, adding that Nigeria debt ratio to her GDP is still within a tolerable limit.
“We are concerned about the debt service ratio as well. I think what we should address more is the challenge of revenue. We are addressing the cost profile of MDAs to ensure they remit their entire operating surplus into consolidated revenue account. “Already, we have eliminated cash collection at Federal Inland Revenue Service and Nigeria Customs Service. This is to ensure we block all areas of leakages and we are working to expand it to other revenue generating agencies”, she said.
On the 2020 budget implementation signed into law yesterday by President Muhammadu Buhari, the Minister said as at end of May 2020, federal government retained revenue was N1.48 trillion, 56% of target:
“FGN share of oil revenues was N701.6 billion (representing 166% of the prorata revised 2020 budget) while non-oil tax revenues totaled N439.32 bn (65% of revised target). Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N213.24 billion and N68.09 billion, representing 62% and 58% respectively of the prorata revised targets for the period. • Customs collections was N158 billion (73% of revised target)”.
Other revenues, she said amounted to N339.51 billion, of which Independent revenues was N80.22 billion (21% of target). Recoveries and Stamp duty collected during the period are yet to be booked in the fiscal accounts.