President Muhammadu Buhari will today present the 2022 budget to the National Assembly (NASS) in Abuja. The event will hold at noon at the National Assembly Complex.
This followed the two chambers of the federal legislature’s passage of the submission of the revised 2022-2024 Medium Term Expenditure Framework (MTEF) Fiscal Strategic Paper (FSP), which the president had presented to them.
Without the passage of the 2022-2024 MTEF, it wouldn’t have been possible for the president’s budget presentation today.
The revised submission was received and referred to the Committee on Finance on Tuesday for expeditious consideration ahead of Thursday’s budget presentation to the National Assembly by President Buhari.
The approval of the revised framework yesterday followed the consideration of a report by the Committee on Finance.
President Buhari had, in a letter to the upper chamber, dated October 4, 2021, explained that the revision was necessitated by the need to reflect the new fiscal terms in the Petroleum Industry Act, 2021, as well as other critical expenditures in the 2022 budget.
According to him, the underlying drivers of the 2022 fiscal projections, such as oil price benchmark, oil production volume, exchange rate, GDP growth, and inflation rate reflect emergent realities and the macroeconomic outlook, and remain unchanged as in the previously approved 2022-2024 MTEF/FSP.
The Senate, in its recommendation, approved the aggregate expenditure of N16.39 trillion from the previous N13.98 trillion for the year 2022.
It also gave its nod to the retained revenue of N10.3 trillion, and N635.4 billion fiscal deficit.
The upper chamber also commended the Budget Office of the Federation and the Federal Ministry of Finance, Budget and National Planning for insisting that MDAs submit their revenue profile as premise for being captured in the 2022 budget proposal.
The chairman of the committee, Senator Olamilekan Adeola, in his presentation, said that Gross Revenue Projection decreased by N341.57 billion, from N8.870 trillion to N8.528 trillion.
According to him, deductions for federally-funded upstream projects costs and 13 percent derivation were slashed by N335.3 billion and N810.25 million, respectively.
He added that while Net Oil and Gas revenue projection declined by N5.42 billion from N6.540 trillion to N6.535 trillion, non-oil taxes remain unchanged.
He explained that the federal government’s retained revenue is projected to increase by N1.773 trillion, from N8.36 trillion to N10.13 trillion.
Adeola disclosed further that the new increase to the FGN Expenditure is N5.241 trillion.
Earlier the Senate President Ahmad Lawan had said that President Buhari will today present the 2022 appropriation bill to a joint sitting of the National Assembly.
Even though the leader of the Senate, Yahaya Abdullahi, and the Deputy Senate President Ovie Omo-Agege had on Tuesday confirmed that Buhari will be presenting the proposed budget on Thursday, Lawan still read a fresh letter the President sent to confirm his coming.
Reading the letter, Lawan said that the President will be at the National Assembly at noon today.
At the House of Representatives yesterday, the lawmakers approved the aggregate expenditure of N16.39 trillion and N10.3 trillion retained revenue for the 2022 fiscal year.
The House also approved a N635.4 billion fiscal deficit to be approved for the incoming financial year.
The House approved, after the consideration of the report of the Committee on Finance on the revised Federal Government of Nigeria 2022–2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), chaired by Hon. Femi Gbajabiamila.
Ahead of the budget presentation, the Federal Executive Council (FEC) yesterday approved the 2022 Appropriation Bill for an aggregate expenditure of N16.39 trillion.
Minister of finance, budget and national planning, Mrs. Zainab Ahmed, disclosed this to State House correspondents after the federal executive council meeting presided over by President Muhammadu Buhari at the Presidential Villa, Abuja.
According to her, the Council noted the changes in the 2022-2024 fiscal projections based on implementation of the Petroleum Industry Act 2021 and other necessary expenditures that should be accommodated in the 2022 Budget.
She also disclosed the key assumptions and targets underlying the budget provisions including oil price – $57 per barrel; oil production – 1.88 mbpd; exchange rate – N410.15/$; oil revenue – N3.15 trillion and non-oil revenue – N2.13 trillion.
Others she gave are federal government’s independent revenue of N1.82 trillion; total projected federal government revenue of N10.13 trillion; Debt Service of N3.61 trillion; Statutory Transfers of N768.28 billion (including N462.53 billion capital component) and personnel costs and pensions of N4.69 trillion; (inclusive of N617.72 billion for the 63 GOEs).
The rest are overhead costs of N792.39 billion (inclusive of N451.0 billion for the 63 GOEs); and capital expenditure (inclusive of capital component of Social Investment Programme, capital in Statutory Transfers, capital of 63 GOEs, Capital Supplementation as well as Grants and Donor funding) of N5.35 trillion (inclusive of N647.08 billion for the 63 GOEs).
“The resultant deficit of N6.258 trillion, which will be financed by new borrowings of N5.012 trillion (of which domestic – N2.506 trillion and foreign – N2.506 trillion); drawdowns on Project-tied Multilateral/Bilateral loans – N1.156 trillion, and Privatisation Proceeds of N90.73 billion,” she stated.
On the approved 2022 Appropriation Bill for an aggregate expenditure of N16.39 trillion for 2022, she gave the components as the adjustments to the Medium-Term Fiscal Framework 2022-2024; Statutory Transfers of N768.28 billion, Debt Service of N3.61 trillion and Sinking Fund for Maturing Debts of N292.71 billion Naira.
Other are recurrent expenditure (non-debt) of N6.83 trillion, inclusive of N350.0 billion for the recurrent component of Social Investment Programme; and aggregate capital expenditure of N5.35 trillion, inclusive of GOEs’ capital expenditure, multilateral/bilateral loan funded projects, capital supplementation and grants/aid funded projects.
According to her, this represents 33% of the expenditure budget.
The minister said President Buhari was intent on leaving improved agriculture production as a legacy, adding: “Currently, the agriculture sector contributes 23% of the GDP. We have a record of expanding the agricultural value chain; we’ve had very little or no processing in agriculture until this administration.
“We now have a very large number of fertiliser blending plants, about 42, that are operating at full capacity. We also have a large number of rice mills that didn’t exist before.
“We have a lot of Nigerians that have taken up agriculture as a business; but apart from agriculture, the president is also rolling out rail lines, and some of which had been started several years ago have been completed.
“The Lagos/Ibadan rail line is now put to use. We all know about the Abuja/Kaduna, and also the Itakpe/Warri rail line has been completed. Work has kicked off on the Kano to Kaduna end of the Lagos/Kano/Ibadan rail line.
“So, Mr. President wants to leave these rail lines. Rail is very important because it is a major means of moving goods across the country. When the rail lines are completed, it will provide much needed relief in terms of movement of goods that our roads now suffer by use of trucks.
“We are also investing in deployment of major roads. Some of them are completed, some are at various levels of completion. There’s also the 2nd Niger Bridge that is also going to be completed during the tenure of this administration.
“The major projects that I just mentioned are fully provided for in the budget. The Federal Ministry of Works and Housing has a provision of N388 billion; the Power sector has about N377 billion; the Ministry of Agriculture has N98 billion; the Transportation Ministry has N189 billion.
“So, all the major projects are being provided for. The target is to make sure that we have some of these key projects completed and commissioned during Mr. President’s tenure.”
On the difference between the price of crude oil and the $57 benchmark for the 2022 budget, the minister pointed out: “You know that the crude oil price in the international capital market is not stable; it goes up and it comes down.
“Our assessment is that $57 per barrel is a safe zone to be in and we did this after extensive consultations with CBN. We checked the research work of the World Bank and other institutions, whose concern is investigating and researching crude oil prices. But you know, the revenue in the budget for oil and gas is a function of the level of production as well as the price.
“We had suffered some setbacks in terms of level of production, occasioned by the limits that the OPEC set. But thankfully, OPEC has changed our quota and that will also soon ramp up.
“In the event that revenues from oil and gas outperform the budget, there is always the safeguard that the excess goes into the Excess Crude Account.
“If that happens, we have not witnessed that in the past one and a half years because the revenues have been very cyclical.”
The minister also disclosed that the government plans to do more borrowing to finance the N6.258 trillion deficit in the proposed 2022 budget.
She maintained that the government would continue to borrow to fund infrastructure projects as it does not get enough from its revenues.
She noted that Nigeria’s revenues could barely accommodate services even as she emphasized that despite the concerns, its borrowings are still at acceptable limits
She said: “If we just depend on the revenues that we get, even though our revenues have increased, the operational expenditure of the government, including salaries and other overheads, is barely covered or swallowed up by the revenue.
“So, we need to borrow to be able to build these projects that will ensure that we’re able to develop on a sustainable basis.
“Nigeria’s borrowing has been of great concern and has elicited a lot of discussions. But if you look at the total size of the borrowing, it is still within healthy and sustainable limits. As of July 2021, the total borrowing is 23% of GDP.”
Further justifying the government’s continuous borrowing, she said: “Government has been borrowing before this administration and continues to borrow, and it is important that we borrow to provide developmental projects in the form of roads, rails, bridges, power and water for sustainable development in this country.
“As of July 2021, the total borrowing is 23% of GDP. When you compare our borrowing to other countries, we’re the lowest within the region, lowest compared to Egypt, South Africa, Brazil, Mexico, the very lowest, and Angola.
“We do have a problem with revenue. Our revenues have been increasing. We just reported to the Council that our revenues from non-oil have performed, as of July, at the rate of 111%, which means outperforming the prorated budget.
“But our expenditure, especially staff emoluments, have been increasing at a very fast rate, making it difficult to cope with government funding.
“So, what we have to do is a combination of cutting down our cost, as well as increasing revenue to be able to cope with all that is required for the government to do, including salaries, pensions, debt service, as well as capital expenditure.”
Also yesterday, Lawan said the National Assembly would mount more pressure on revenue generating agencies to ensure that they remit N1 trillion in revenues annually to enable the federal government to fund its budget.
Lawan stated this in his remarks after the chamber approved for President Buhari to get more revenues through the agencies to reduce the government’s deficit and dependence on external borrowing to fund the country’s national budget.
Lawan noted that increased revenue can be realised if the Executive and Legislature collaborate to ensure that revenue generating agencies remit all monies collected to the treasury.
He said, “I’m sure that those MDAs that remitted N400 billion could possibly have remitted N1trn if we had pushed harder.
“So, we need to push harder because what this means is a revelation, that many of these MDAs have been cornering funds that ordinarily should have gone to the treasury.
“But for many years, they have been taking the funds unfairly and illegally. So, we should not be content with only N400 billion,” he said