COVID-19 pandemic: FEC reduces Budget 2020 to N10.523trn
THE Federal Executive Council, FEC, yesterday, revised the 2020 Budget from N10. 594 trillion signed into law by President Muhammadu Buhari to N10. 523 trillion. FEC also approved the amendment of the Medium Term Expenditure Framework, MTEF for 2020-2022.
Recall that the National Assembly had increased the 2020 budget from N10.33 trillion submitted by the executive to N10.594 trillion. The budget cut, especially the review of oil benchmark to $25 per barrel, drew the attention of experts who advised the federal government to immediately diversify the economy with money realised from sale of the product, to stop depending on oil.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this while briefing State House correspondents after the virtual FEC meeting presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa, Abuja. According to her, Council approved the recommendations with key parameters, including the price of crude oil which was pegged at $25 per barrel, crude oil production at 1.94 million barrels per day and an exchange rate of N360 to $1. She said the revised budget was now a total sum of N10.523 trillion, a difference of about N71.5 billion when compared to the approved budget.
The minister explained: “This is because, as we cut down the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic. “The federal government in this budget will have direct revenue of funding the budget of N5.158 billion. The deficit to this budget is N5.365 trillion and this will be financed by both domestic as well as foreign borrowing.
“The foreign borrowing we are doing for 2020 are all concessionary loans from the IMF which have already been approved and have crystallized, from the World Bank, Islamic Development as well as Afro EXIM bank. “There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both existing facilities as well as some special accounts, with the approval of Mr. President and the National Assembly. And also revenue that we are expecting to realize from privatization.
“So, the borrowing, the multilateral loans drawdown coming from special accounts and coming from the privatization will fund the fiscal deficit of N5.365 trillion that we have in the proposed amendment of the 2020 budget.” Abakaliki Ring Road project The Minister disclosed that the request of $80 million loan from the Islamic Development Bank on behalf of the Ebonyi State government was also approved by FEC Mrs. Ahmed, who noted that the money would be used to finance the construction of the Abakaliki Ring Road project, said: “While the federal government is the one borrowing from the bank, it will be unlending this loans to Ebonyi State government. “We have done our debts sustainability analysis that proves that Ebonyi State has the capacity to repay this loan which is provided on a basis of Libel plus and also long tenure for repayment.
“This Ebonyi Ring Road connects 13 local governments in the states as well as the neigbouring Cameroon Republic. It is a major road that will provide access to the citizens in the state, to farmers, markets and will enhance economic activities in the state. And the neigbouring states will also benefit from this project.” She said the Council also approved the purchase of three locally manufactured boats for the Nigeria Customs Service for its surveillance and anti-corruption activities on the maritime waters. Vanguard
