The Federal Executive Council (FEC) wednesday approved the revised Medium Term Expenditure Framework (MTEF) and the 2020 budget, slashing the original budget signed into law from N10.594 trillion to N10.523 trillion, translating to a difference of N71.5 billion.
The council also approved N47.235 billion for the provision of additional power grid infrastructure to aid the supply of 40 megawatts of electricity and $80 million loan for Ebonyi State.
In addition, it consented to a loan facility of $1.2 billion to finance the mechanisation of agriculture in 632 local government areas (LGAs) nationwide.
The revised budgetary estimates are based on a benchmark of $25 per barrel of crude oil, down from the original $57 per barrel and at a production rate of 1.94 million barrels per day (bpd).
The revision of the budget came against the backdrop of the economic crisis unleashed by the double whammy of the onset of the COVID-19 pandemic, which disrupted economic activities, and the sharp decline in the price of crude oil occasioned by the impact of the pandemic and oil price war between two critical producing nations, Russia and Saudi Arabia.
Addressing journalists, after a virtual meeting of FEC, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the revision of the original budget signed into law from N10.594 trillion to N10.523 trillion, translated to a difference of N71.5 billion.
The virtual meeting was presided over by President Muhammadu Buhari.
The Budget threshold translates to an increase in the size of the revised 2020 budget by N318 billion from N10.276 trillion earlier proposed but not submitted to the National Assembly, to N10.523 trillion.
Ahmed explained that the new budget was based on the crude oil benchmark price of $25 per barrel for the adjusted 2020 budget, up from the $20 per barrel earlier announced by the Budget Office and down from the $30 earlier proposed and the $57 in the original budget.
She added that the approval for the 2020 budget was the fallout of a review of the 2020-2022 MTEF.
According to her, the revised budget implies N71.5billion reduction from the initial N10.59 trillion budget passed by the National Assembly, adding that the revised budget is made up of a revenue target of N5.158 trillion and a budget deficit of N5.365 trillion.
Ahmed, who said the deficit would be financed by both external and internal borrowing plans, highlighted the borrowing arrangements with the proposed creditors.
“The Ministry of Finance, Budget and National Planning submitted a memo to the council for approval of the amendments of the Medium Term Expenditure Framework for 2020-2022 as well as an amendment to the 2020 budget.
“The council has approved our recommendations and the approval has these key parameters. The crude oil price is approved at $25 per barrel; crude oil production is at 1.94 million barrels per day, and then an exchange rate of N360 to $1.
“The revised budget is now in the total sum of N10.523 trillion, a difference of just about N71.5 billion when compared to the approved budget. This is because as we cut down the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic.
“The federal government in this budget will have direct revenue of funding the budget of N5.158 trillion. The deficit to this budget is N5.365 trillion and this will be financed by both domestic as well as foreign borrowing. The foreign borrowing we are doing for 2020 are all concessionary loans from the IMF, which has already been approved and has crystalised; from the World Bank, Islamic Development as well as Afro-Exim Bank. “There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both exiting facilities as well as some special accounts with the approval of Mr. President and the National Assembly and also revenue that we are expecting to realise from privatisation.
The council also approved N47.235 billion for the provision of additional power grid infrastructure to aid the supply of 40 megawatts of electricity and $80 million loan for Ebonyi State.
In addition, it consented to a loan facility of $1.2 billion to finance the mechanisation of agriculture in 632 local government areas (LGAs) nationwide.
The revised budgetary estimates are based on a benchmark of $25 per barrel of crude oil, down from the original $57 per barrel and at a production rate of 1.94 million barrels per day (bpd).
The revision of the budget came against the backdrop of the economic crisis unleashed by the double whammy of the onset of the COVID-19 pandemic, which disrupted economic activities, and the sharp decline in the price of crude oil occasioned by the impact of the pandemic and oil price war between two critical producing nations, Russia and Saudi Arabia.
Addressing journalists, after a virtual meeting of FEC, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the revision of the original budget signed into law from N10.594 trillion to N10.523 trillion, translated to a difference of N71.5 billion.
The virtual meeting was presided over by President Muhammadu Buhari.
The Budget threshold translates to an increase in the size of the revised 2020 budget by N318 billion from N10.276 trillion earlier proposed but not submitted to the National Assembly, to N10.523 trillion.
Ahmed explained that the new budget was based on the crude oil benchmark price of $25 per barrel for the adjusted 2020 budget, up from the $20 per barrel earlier announced by the Budget Office and down from the $30 earlier proposed and the $57 in the original budget.
She added that the approval for the 2020 budget was the fallout of a review of the 2020-2022 MTEF.
According to her, the revised budget implies N71.5billion reduction from the initial N10.59 trillion budget passed by the National Assembly, adding that the revised budget is made up of a revenue target of N5.158 trillion and a budget deficit of N5.365 trillion.
Ahmed, who said the deficit would be financed by both external and internal borrowing plans, highlighted the borrowing arrangements with the proposed creditors.
“The Ministry of Finance, Budget and National Planning submitted a memo to the council for approval of the amendments of the Medium Term Expenditure Framework for 2020-2022 as well as an amendment to the 2020 budget.
“The council has approved our recommendations and the approval has these key parameters. The crude oil price is approved at $25 per barrel; crude oil production is at 1.94 million barrels per day, and then an exchange rate of N360 to $1.
“The revised budget is now in the total sum of N10.523 trillion, a difference of just about N71.5 billion when compared to the approved budget. This is because as we cut down the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic.
“The federal government in this budget will have direct revenue of funding the budget of N5.158 trillion. The deficit to this budget is N5.365 trillion and this will be financed by both domestic as well as foreign borrowing. The foreign borrowing we are doing for 2020 are all concessionary loans from the IMF, which has already been approved and has crystalised; from the World Bank, Islamic Development as well as Afro-Exim Bank. “There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both exiting facilities as well as some special accounts with the approval of Mr. President and the National Assembly and also revenue that we are expecting to realise from privatisation.
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