NATIONAL ASSEMBLY RAISES OIL BENCHMARK TO $28, SLASHES OUTPUT
The National Assembly has approved the revised 2020-2022 Medium-Term Expenditure Framework and Fiscal Strategy Paper presented to the National Assembly on Thursday by the President, Major General Muhammadu Buhari (retd.). The revised 2020 budget would be predicated on the projections contained in the MTEF/FSP submitted to the nation’s parliament last week.
The two chambers, after the consideration of the reports of their committees on finance, raised the oil benchmark from $25 per barrel proposed by the president to $28. The parliament also slashed the projected daily oil output from 1.93 million barrels per day to 1.8 million bpd. The House of Representatives declared the Excess Crude Account, which contains revenue in excess of the set benchmark, illegal, while the Senate demanded the withdrawal of the funds in the Natural Resources Development Account to develop the nation’s resources.
The Chairman of the Senate panel, Solomon Adeola, and his counterpart in the House of Representatives, James Faleke, presented the recommendations as contained in their reports to their respective chambers. They urged the National Assembly to urgently amend the Fiscal Responsibility Act in order to make it more responsive to present-day realities.
Some critical parameters such as the exchange rate of N360 to a dollar, 14.43 per cent inflation growth rate, and the 4.42 per cent GDP growth rate as proposed in the document from the executive were retained by the legislature. Other assumptions also retained are N5.09Tn FGN’s revenue, N10.51tn proposed expenditure, N4.95Tn fiscal deficit, and N4.17Tn new borrowings (including foreign and domestic borrowing).
They also approved N398.5Bn as statutory transfers, N2.68Tn for debt serving, N272.9Bn as sinking fund and N536.7Bn for pension and gratuities. The federal parliament also retained the critical components of the proposal as presented by the executive with the adoption of N10.51Tn as total expenditure; N4.93Tn as total recurrent expenditure; N2.83Tn for personnel cost and N2.23Tn for capital expenditure.
They said the increase effected on the oil price benchmark was as a result of the recent upward trend of the crude oil price, which as of Tuesday stood at $38 per barrel with a very strong expectation that the price would rise to $40 -$45 per barrel.
The President of the Senate, Ahmad Lawan, urged the Senate Committee on Privatisation to liaise with the Bureau of Public Enterprise in ensuring that the projected N260Bn from proceeds of privatised agencies was realised and used accordingly to fund the budget. He frowned on some of the special accounts being kept by the executive, particularly the Natural Resources Development Accounts.
According to him, such accounts at this time of scarcity of funds to finance the budget are not necessary. The House of Representatives said all agencies of government must submit their revenue performance to the National Assembly on monthly basis.