MTEF/FSP: Senate Rejects N1.7trn Subsidy Proposal

The Senate yesterday rejected a report by its Committee on Finance to reduce N3.6 trillion proposed for subsidy in the 2023 budget by the executive to N1.7trillion.

President Muhammadu Buhari had in the 2023 – 2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), proposed N3.6trillion for fuel subsidy from January to June in 2023.

But the Senate Committee on Finance in its report on the proposals presented for consideration by the Senate recommended N1.7 trillion for fuel subsidy for the entire 2023 which was however rejected by sustaining the earlier proposed N3.6trillion earmarked for subsidy.

The Senator Olamilekan Adeola (APC Lagos West)-led committee’s recommendation for a $73 per barrel oil price benchmark for the proposed N19.76 2023 budget was however approved against $70 per barrel proposed by the executive in the MTEF/FSP documents.

Recommendation on exiting 10 out of the 63 Government-owned Enterprises (GOEs), made by the committee, was also approved by the Senate.

The affected GOEs are the Nigerian Communication Commission (NCC), Corporate Affairs Commission (CAC), Nigeria Port Authority (NPA), Joint Admission and Matriculation Board (JAMB) and Nigerian Maritime Administration and Safety Agency (NIMASA) .

Others are the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), National Agency for Food and Drug Administration and Control (NAFDAC), Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMPDRA).

The recommendation states: “That 10 out of the 63 GOEs be placed on cost of collections to serve as a test case for other GOEs which can be added in the future.

“The list of these GOEs includes, NCC, CAC, NPA, NIMASA, NUPRC, FIRS, Customs, NMPDRA, JAMB and NAFDAC with immediate effect through the proposed Finance Bill 2023 coming up with amendment on the existing Act of agencies .

Olamilekan in his presentation said scenario 2 of the 2023 budget proposed by the executive in the MTEF / FSP document was adopted by the committee because of lesser vote for budget deficit and over N1 trillion for capital votes for the various Ministries, Departments and Agencies (MDAs).

The scenario has a proposed total expenditure profile of N19.76 trillion and deficit of N11.30 trillion as against scenario one which has a proposed total expenditure profile of N18.75 trillion with deficit of N12.41 trillion and zero allocation for capital projects for the MDAs.

The scenario two proposed recommended by the committee for approval by the Senate and accordingly approved is based on other critical parameters like 1.69million barrel oil production per day, N437.57k exchange rate to a US dollar and 3.75% Gross Domestic Product ( GDP) growth rate .

Others are projected inflation rates of 17.16% and new borrowings of N8.437 trillion, N6.31trillion for Debt Service, N722.11billion as statutory transfers etc.

Many of the senators in their submissions before the adoption of the report, expressed their reservations on the N437 exchange rate to a dollar which according to them gives over N300 difference to the N730 or N740 to a dollar it is at the parallel market.

Senator Adeola in his response to the reservation, said the committee attempted to increase the exchange rate from N437 to N550 to a US dollar but threaded caution, in avoiding further devaluation of the Naira.

The president of the Senate, Ahmad Lawan, in his remarks, said based on observations and findings made by the committee, Nigeria is in a war situation as far as crude oil theft is concerned and also under revenue remittances by many of the MDAs.

“The scenarios proposed are very challenging ones and all hands must be on deck to stem the tide,” he said.

The passed MTEF / FSP documents will be the basis upon which President Muhammadu Buhari will anchor projections and pro

posals of the 2023 budget scheduled for presentation to the joint session of the National Assembly Friday this week.

….Federal Executive Council Approves N19.76trn 2023 Budget

The federal executive council has approved the 2023 budget proposal in time for presentation to the National Assembly on Friday.

Presidential spokesman, Femi Adesina, disclosed this to State House correspondents yesterday after the meeting of the council presided over by President Muhammadu Buhari at the Presidential Villa.

According to him, the draft document, prepared by the Ministry of Finance and Budget Planning, was therefore presented to Buhari at the meeting during which it was “extensively discussed” by the cabinet.

Adesina, however, declined to give details of the budget proposals discussed at the “one-item meeting”, explaining that it would not be proper to give out the details now before the document is formally presented to the National Assembly members.

He said “It was virtually one item for the executive council meeting in which the budget proposals for 2023 were presented and discussed, at length.

“That budget proposal will be taken to the National Assembly on Friday morning by Mr. President. So, it will not the proper to begin to discuss the contents of what will be officially presented on Friday.

“So, that is the information I have for us, that we won’t have the traditional briefing of what happened at the council because it’s about a budget that will be presented on Friday morning. We’ll want to give the National Assembly the honour of receiving it first thank you.

When asked if the budget was endorsed by the council, he said, “What was done was that it was discussed extensively and there were inputs, whichever input needs to be reflected before Friday will be done and then it will be presented to the National Assembly.

“Let me tell you, you’ll have the Revised 2023/2025 Fiscal Framework. You will have an Expenditure Profile. You’ll have Budget Proposal, you’ll have Aggregate Expenditure, Overhead Costs, Personnel Cost, Capital Expenditure, and so on.

“So, all those things have been discussed and where they needed to tweak some of the projections that has been done. The final approved copy will be presented by the President on Friday, he added.

He also responded to questions on why the FEC meeting has continued to be held virtually instead of in person despite the abatement of the COVID-19 pandemic, which necessitated the measure.

According to Adesina, the FEC was adhering to the advice of the national steering committee on COVID-19, which recommended precautions like wearing masks and reducing the number of persons congregating in an enclosed space or room like the Council Chamber where the FEC session holds.