The Federal Government has projected N9.78 trillion budget for 2020 fiscal year.
It will also, from this September, begin deduction of the N614 billion bailout funds it gave to states for payment of salaries of workers in 2016.
Zainab Ahmed, Minister of Finance, Budget and National Planning, who disclosed these on Tuesday said that the deduction would commence in the Federation Accounts Allocation Committee (FAAC) provision for states in September.
The minister was speaking at a Public Consultative Forum on the draft 2020-2022 Medium Term Expenditure Framework/Fiscal Strategy Paper (FSP) in Abuja.
She said that the funds would be deducted from source and remitted to the Central Bank of Nigeria (CBN), adding that the refund would not form part of the revenue for funding the budget.
“It was a loan which was advanced by the CBN and the repayment will be made to the same CBN.
“So the recovery process for us is to deduct from the FAAC allocation to the states and remit same to the CBN.
“We are going to start these remittances by the next FAAC. So there will be no requirement for us to consider the Fiscal Sustainability Plan (FSP) implementation.
“We want the states to stay on the path of fiscal sustainability, but it will not be a condition for the deduction. We will deduct direct from source and remit to the CBN,” the minister said.
It would be recalled that the Federal Government gave out the loans to 35 states as conditional budget support provided by the CBN to help them pay salaries, gratuities and pensions.
The loans were provided by the CBN at nine percent, with a grace period of two years, while the Federal Ministry of Finance helped in the disbursements, with documented approval by the presidency.
Only Lagos State did not access the loan.
On the issue of waivers and incentives to businesses, Ahmed said that it was agreed from the finance side that there were actually too many of them and that it was costing the government a lot.’
“We also agree that there has to be a review of the pioneer status certificate issuance process because the waivers and the incentives are costing us a lot.
“However, when decisions have been made and approvals have been given and businesses make their decisions based on those incentives, you cannot pull them out overnight.
“So there has to be a period within which the commitments that have been made are allowed to exit before you post new conditions, but we are currently reviewing the quantum of the waivers,” Ahmed said.
According to her, the idea is to see which one can be reviewed to pull back from to reduce the cost on government.
Ahmed said that the projected budget for 2020 was N9.78 trillion, N10.110 trillion for 2021 and N10.418 trillion for 2022, with revenue for 2020 projected to be N7.63 trillion.
According to her, privatisation proceeds is expected to rake in N126.5 billion in 2020, while multi-lateral/bilateral project-tied loans are to bring in N328.1 billion.
On the expenditure side, while capital expenditure would gulp N1.764 trillion, 21 percent lower than the N2.962 trillion (32 percent) budgeted in 2019, N4.749 trillion was projected for recurrent expenditure in 2020.
The minister said that the recurrent expenditure was occasioned by rise in personnel cost and marginal increase in overhead due to creation of more ministries.
“Debt service is projected to gulp N2.452 trillion, sinking fund N296 billion and statutory transfers N526.45 billion in 2020,” she said.
Ahmed added that personnel costs, inclusive of pension costs, had continued to rise, as it was set at over N3 trillion, adding that the Federal Government was taking steps to contain it.
She said that one of the steps taken was a directive by President Muhammadu Buhari that all MDAs must implement the Integrated Personnel and Payroll Information System (IPPIS) by October, failure of which salaries would not be paid to them.
New borrowings, she said, would be N1.7 trillion to be shared equally between domestic and foreign creditors.
Meanwhile, total fiscal deficit was put at N2.14 trillion for 2020.
For the key assumptions in making the projections, the minister said that oil production volume on the average was expected to be 2.18 million barrels per day (mbpd), lower than the 2.3mbpd projected in 2019.
“Actual daily crude oil production and exports have been well below budgetary projections since 2013, despite the installed capacity of up to 2.5mbpd, for a number of reasons.
“For 2018, actual production was 1.84mbpd and for the first half of 2019, it was 1.86mbpd,” she said.
Ahmed added that considering the expected oil glut in 2020 and the need to plan against unexpected oil price shock, a lower benchmark oil price of $55 per barrel was set against the $60 per barrel projected in 2019.’
On Gross Domestic Product (GDP) growth rate, she said that 2.93 percent was projected for 2020, 3.35 percent for 2021 and 3.85 percent for 2022.
FG Receives N2trn Revenue From January To June 2019
Meanwhile, the Federal Government received two trillion naira as revenue from January to June 2019, Director-General of the Budget Office, Ben Akabueze, has said.
Akabueze disclosed this at the Public Consultative Forum on the 2020 to 2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) in Abuja on Tuesday.
He explained that within the period under review, about N3.3 trillion was expended by the Federal Government.
The director-general said that there was an average of 1.6 million barrel of crude oil production per day on base production.
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