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FEC approves N13.08trn budget proposal for 2021

…projects N7.89trn revenue, N4.489trn deficit

Ministry of Finance, Budget and National Planning has submitted a N13.08 trillion appropriation proposal for the 2021 fiscal year to the Federal Executive Council FEC). The government projected to collect the total sum of N7.89 trillion as revenue while it pegged the total deficit for the 2021 fiscal year at N4.489 trillion.

In the budget assumptions, benchmark for crude price was put as $40 perbarrel while the daily crude production was pegged at 1.86 million barrels per day. The exchange rate was projected at N379 per dollar as the government projected 3% GDP growth and 11.95% inflation rate for the 2021 fiscal year. Briefing newsmen after the weekly Council meeting chaired by President Muhammadu Buhari, yester-day, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, however, clarified that of the projected daily crude production, only 1.46mbd would be put forward to meet the 1.5mbd OPEC quota while the remaining 400,000 were condensates. According to her, the clarification was important so that it would not seem as if the government planned to overshoot the OPEC quota.

Ahmed said: “In presenting the Budget 2021, we had to report to Council some slight changes that need to be made on MTEF 2021/2023, which has, since July, been sent to the National Assembly by Mr. President. Specifically, the exchange rate is going to be changed from N360 to $1 that we initially presented and submitted to Council and to the National Assembly, up to N379.

The reason why this is happening is due to the exchange rate movement that the CBN has put in place. “Also, there were some slight changes on miscellaneous revenues and signature bonuses after interaction with DPR, which resulted in some increase in revenue.

“The total budget proposal that is made for 2021 is to enable us to attain a more inclusive growth and also to achieve the key objectives of government, which includes stimulating the economy, creating jobs, enhancing growth and creating infrastructural investment, also promoting manufacturing and local production.

“The budget assumptions that were presented to Council today include, one; crude oil price benchmark at $40 per barrel. Two, oil production at 1.86 million barrels per day. Exchange rate of N379 to US$1. Four, GDP growth target of 3%; and five, inflation rate of 11.95%. “We do expect that Nigeria’s economy will recover to the path of growth early in 2021, so the total aggregate revenue that is projected for the 2021 Budget is N7.89 trillion and what is unique about the 2021 Budget is that we have brought in the budgets of 60 government-owned enterprises. If you recall, in 2020 we brought in 10, now we have brought in 60.

“These 60 exclude NNPC and the Central Bank and the reason being NNPC, a national oil company, is not included in the national budget. Also, the CBN is an autonomous body. Only those two are excluded, 60 government-owned enterprises included.

That is to say their revenue and all categories of expenditure are now integrated in the budget. “We have a total aggregate revenue of N7.89 trillion and also an aggregate expenditure of N13.08 trillion for 2021.

There’s a fiscal deficit of N4.489 trillion, this represents 3.64%, slightly above what is required by the Fiscal Responsibility Act of 3% and also to report that the total capital expenditure that is projected in the Budget is 29% of the aggregate expenditure.

“This is an improvement over the 24% that we had in the 2020 Budget, but slightly below the 30% that we targeted in the economic recovery.” The minister disclosed that the budget proposal would be transmitted to the National Assembly by October 8. Meanwhile, the House of Representatives has approved the 2021–2023 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The House recommended an amendment of the nation’s auto policy by reviewing downward the levy imposed on imported vehicles to 15% and 20% on both commercial vehicles (buses and trucks) and luxury vehicles respectively.

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