…suggests exchange rate at $ N360 to $1
The Federal Government yesterday proposed aggregate expenditure of N11.86 trillion for 2021 fiscal year in the Medium Term Expenditure Framework and Fiscal Strategy Paper for 2021-2023 (MTEF & FSP), unveiled through virtual by the Minister of Finance, Budget and National Planning, Hajiya Zainab Usman.
In the document presented to the public, the Federal Government aggregate projected revenue for 2021 is estimated at N6.98 trillion and deficit of N5.16 trillion. The MTEF& FSP documents to be presented to the members of the Federal Executive Council (FEC) and members of National Assembly at later dates, serve as foundation for considering the 2021 fiscal budget. The presentation of the documents coincided with the day President Muhammadu Buhari also signed into law the revised 2020 budget for the country.
The revised 2020 budget of N10.5 trillion has a reduced 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 year 2021, the government proposed $40 crude oil benchmark, oil production of oil production (mbpd) 1.86 and exchange rate of N360 to $1 and inflation rate of 11.95 per cent, according to MTEF document unveiled yesterday by the Federal Government. She explained that the draft 2021 – 2023 MTEF/ FSP was 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.” On key assumptions of 20121 to 2023 MTEF Projections, the minister said: “Oil GDP is expected to contract by 12.96 per cent in 2020, year on year, causing an economy wide drag resulting in slower growth in nonoil GDP by -3.6 per cent, year on year. “Based on this, real GDP is expected to decline by 4. 2 per cent 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,” she said. In her remarks, Ahmed underscored the enormous revenue challenges facing government, which is occasioned by the plunge in crude oil price and COVID- 19 challenge.