Posted on Tue 10 Sep 2019, 05:18 PM

Mrs Zainab Ahmed said Nigeria is planning to trim its budget for 2020 marginally by 0.19 %  to N8.90 trillion, as against the N9.16 trillion approved by lawmakers for 2019.

The government approved a 34 and 66 %  capital/ recurrent expenditure fiscal policy in 2018 and 32 and 68 %  in the approved 2019 budget.

Details of the medium term expenditure framework (MTEF) and fiscal strategy paper (FSP) 2020-2022 showed that capital expenditure will suffer successive cuts for the three-year period to N1.76 trillion, N1.70 trillion and N1.68 respectively for 2020, 2021 and 2022 despite increases in total expenditure at N8.6 trillion, N8.98 trillion and N9.4 trillion during the same period.

 Recurrent on the other hand, is expected to increase from N3.41 trillion in 2018 to N4.7 trillion in 2019.

Key Assumptions of the 2020 Budget Framework: Oil Production 2.18 mbpd; Oil Price $55/b; Exchange Rate N305/$; Inflation Rate 10.81%; Nominal Consumption N122.75 trn; N142.96 trn Nominal GDP; and GDP Growth Rate of 2.93%.

A lower benchmark oil price of $55/b (against $60/b for 2019) is assumed considering the expected oil glut in 2020, as well as the need to cushion against unexpected price shock.

There are strong indications of an oversupplied market in 2020. All three of the major forecasters – Organization of the Petroleum Exporting Countries (OPEC), International Energy Association (IEA) and the U.S Energy Information Administration (EIA) generally see non-OPEC production growing by around 2mbpd this year, and by even more next year.

Federal government plans to borrow N1.7 trillion in 2020 of this amount, N850 billion will be domestic borrowing while the balance of N850 billion will be from foreign borrowing.

In addition, federal government has projected a total fiscal deficit of N2.154 trillion with additional funding coming from: privatisation proceeds N126,522,715,909; multi-lateral/Bi-lateral project-tied loans N328,128,150,000.

Sale of government property and Non-Oil asset sales are expected to be nil in 2020.

Total budget for 2020 is put at N9,789,243,849,466. For 2021, N10,110,193,322,738 and in 2022, N10,418,391,196,907.

Zainab Ahmed also warned that the “Africa Continental Free Trade Area (AfCTFA) could create a nightmare situation for the country unless the right policies and actions are implemented expeditiously to improve Nigeria’s economic competitiveness.”

 

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