CHUKWU DAVID reports that the National Assembly was in a serious dilemma in the process of 2020 budget passage following the negative impact of COVID-19 pandemic on the international crude price and the country’s revenue
For the first time since the country’s return to civil governance in 1999, the National Assembly has passed the 2020 budget of the federation three times yet it is not certain that it would be the last time the lawmakers would rework the budget. Nigeria is a mono product economy. Her main source of revenue in the last several decades is crude oil.
In the days of oil boom, the country could boast of sufficient funds to prosecute her capital projects as well as meet the recurrent needs of annual budgets. Although things were relatively rosy for the country in those years, however, economists and other systems analysts continued to warn against the dangers of the nation depending on one source of revenue because many countries of the world have been desperately looking for alternative to crude oil over the years. This explains why successive governments in Nigeria have been stressing the need to diversify the economy, so that there could be alternative sources of revenue to oil.
Unfortunately, this dream has always ended as a lip service during past administrations and even in the present one. With the advent of the Coronavirus pandemic, which placed a lot of restrictions on global economy and economic activities, the price of crude oil drastically crashed at the international market, with Nigeria being one of the nation’s worst hit.
This poses serious concerns to the government, which has to source funds at all costs to meet its obligations to the people. Revenue generation has abysmally dwindled and there is so much to be done to keep the system alive and running. Meanwhile, the National Assembly had in December 5, 2019, passed a N10.594 trillion 2020 budget, which was N264 billion higher than the N10.33 trillion presented to the joint session of the National Assembly on October 8, 2019 by President Muhammadu Buhari.
The crude oil benchmark approved by the nation’s highest lawmaking body was $57 per barrel as against $55 recommended in the budget document presented to the apex Assembly by Buhari. However, following the fall in the price of crude oil, with its attendant shortfall in revenue generation, it became obvious that the 2020 budget would not be implementable if left the way it was passed by the National Assembly. Accordingly, the executive arm, in consultation with the National Assembly, adjusted some of the projections earlier made, and forwarded the same to the federal lawmakers for approval.
In the revised budget, the executive put the benchmark at $25 per barrel. The executive also reduced the budget figure from N10.594 trillion to N10.509 trillion. However, while considering the revised budget, both chambers of the National Assembly, increased the $25 per barrel oil price benchmark to $28 per barrel.
The also raised the budget from N10.509 trillion to N10.805 trillion. But in the last minute tinkering with the 2020 Appropriation Bill, the National Assembly, after a thorough consideration of so many things in the budget, resolved to raise the revised budget to N10.810 trillion. Following this increment, the revised budget figure for the 2020 fiscal year is now higher by N216 billion.
A breakdown of the sum of N10,810,800,872,072 to be issued from the Consolidated Revenue Fund, shows that N428,032,186,792 is for Statutory transfers; N2,951,710,000,000 is for Debt Service; N4,942,269,251,934 is for Recurrent (Non-Debt) Expenditure and N2,488,789,433,344 is for contribution to the Development Fund for Capital Expenditure .
Again, sequel to the fact that the revised budget was largely to be financed by a huge external loan, votes for budget service were increased from N2,725,498,930.00 contained in the budget passed in December, 2019 to N2.95 trillion. Also, the budget deficit has risen from N2.28 trillion to 4.17 trillion. The 2020 Appropriation Act (Amend ment) Bill is predicated on oil production of 1.8 million barrels per day and a benchmark oil price of $28 dollar per barrel. The official exchange rate has also been adjusted upwards to N360/ US$1.
The revised 2020 budget as passed showed that the National Assembly dropped the proposed figure of N10.509 trillion by the President to adopt its own figure of N10.810 trillion. This means that the National Assembly added N301 billion to the figure proposed by the President.
In passing the revised budget, the lawmakers explained that “the total aggregate recommended sum is higher than the proposed figure because of the accommodation of the request by the executive for additional funding for COVlD-19 to strengthen the capacity of all the states in the federation to tackle the challenges of the pandemic.” Part of the fund will also go for contingency, GAVI/immunization and the restoration/upward adjustments of important and people oriented projects and programmes that were in the 2020 Appropriation Act but were either completely removed or substantially reduced in the bill.