Sequel to the unveiling of the 2021 budget, Minister of Finance and National Planning, Mrs. Zainab Ahmed has said that in financing the federal budget deficit, Nigeria will borrow from domestic and foreign sources, as well as multilateral and bilateral finance organizations.
She made this known on Tuesday at the public presentation of the details of the budget in Abuja.
As said by the Finance Minister, loans from domestic and foreign revenue sources are estimated to contribute about N2.14 trillion each, while loans from multilateral and bilateral groups will provide about N709.69 billion and privatization proceeds about N205.15 billion.
Mrs. Ahmed stated that the other source of funding for the deficit will be the proceeds from the privatization of public enterprises.
It will be recalled that President Muhammadu Buhari on Thursday presented the “2021 Budget of Economic Recovery and Resilience” to the joint session of the National Assembly in Abuja.
The president said he expects budget to help place the country’s economy on the path of recovery, growth and resilience.
According to Mrs Ahmed, the key parameters in the medium term expenditure framework (MTEF) and the fiscal strategy paper upon which the initial proposals were based, were revised in line with realities as a result of the impact of COVID-19 pandemic.
The revised assumptions include oil price benchmark of $40 per barrel from the initial $28; oil production capacity of 1.86 million barrels per day and exchange rate of N379 to the dollar.
Other assumptions include an inflation rate of 11.95 per cent, with non-oil gross domestic product (GDP) estimates of about N132.59 billion; oil GDP of N10.102 billion; nominal GDP of N142.694 billion, with GDP growth rate of 3 per cent and nominal consumption rate of N11.887 billion.
Though Mrs Ahmed stated that Nigeria’s total oil production capacity was about 2.5 million barrels per day, the country’s current production is 1.7 million barrels per day, including the 300,000 BPD of condensates, in compliance with the quota ceiling by the Organization of Petroleum Exporting countries (OPEC).
Despite the constraints of low revenue from oil exports, the minister said the aggregate revenue available to fund the 2021 Budget is projected at about N7.9 trillion, about 35 per cent higher than the 2020 revised Budget of N5.84 trillion.
Mrs Ahmed said the budgets of the 60 government-owned enterprises would be integrated into the government’s 2021 Budget proposal, with 31 per cent of the projected revenue expected from oil-related sources, while 69 per cent is from non-oil sources.
Total Federal Government budget (including government-owned enterprises and project-tied loans), the minister said, is about N13.08 trillion, with total deficit of about N5.196 trillion constituting about 3.64 per cent.
Speaking on the performance of the 2020 Budget, Mrs Ahmed stated that it was prepared based on oil benchmark price projection of $57 per barrel, oil production capacity of 1.8 million BPD; exchange rate of N360 to the dollar; inflation rate of 14.13 per cent and GDP growth rate of 4.2 per cent.
Following the ravage of COVID-19, the minister said the parameters were revised to crude oi price of $38.64 per barrel between January and July; crude oil production capacity of 1.8 million BPD; exchange rate of N379 to the dollar; inflation rate of 12.82 per cent and GDP growth rate of 2.188 per cent.
As of the end of August, she said available revenue for budget funding (excluding government-owned enterprises) stood at about N2.52 trillion, or 71 per cent of the target.
Out of the figure, she said the federal government’s share of oil revenues was about N1.105 trillion (about 164 per cent performance over the pro-rated sum in the revised 2020 Budget), while non-oil tax revenues stood at about N31.4 billion (about 7 per cent of revised target).
Company Income Tax (CIT) and Value added tax (VAT) collections for the period were about N447.552 billion and N117.75 billion, representing two per cent and 62 per cent respectively, of the pro-rated revised revenue target.
Also, Customs collections were about N2666.14 billion (about 77 per cent of revised target), with other revenues of about N583.2 billion out of which independent revenues accounted for N281.81 billion.
On the expenditure side, Mrs Ahmed said a total of N9.96 trillion was appropriated, excluding GOEs projected-tied loans, while N6.25 trillion, representing about 93.9 per cent of the pro-rated N6.655 trillion, was actually spent.
Of the expenditure, about N2.14 trillion was for debt service and N2.1 trillion for personnel cost, including pensions. Her words: “As at end of August 2020, N761.79 billion had been released for capital expenditure, rising to N1.2 trillion by the end of September 2020”.