COVID-19: FEC cuts Budget 2020 by N71.5bn to N10.523tr

 

• Pegs crude oil price at $25 per barrel
• Fixes Exchange Rate at N360 to $1

 

The Federal Executive Council (FEC) on Wednesday revised the 2020 Budget from N10.594 trillion signed into law by President Muhammadu Buhari to N10. 523 trillion by reducing it by N71.5 billion.

The FEC also approved the amendments of the Medium Term Expenditure Framework, MTEF for 2020-2022.

The National Assembly had increased the 2020 budget from N10.33 trillion submitted by the executive to N10.594 billion.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed this while briefing State House correspondents after the maiden virtual FEC meeting presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa Abuja on Wednesday.

According to the Minister, the 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 that the revised budget is now N10.523 trillion, a difference of about N71.5 billion when compared to the approved budget.

She said: “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 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 has already been approved and has 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 drawdown of the multilateral loan 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.”

The Minister disclosed that the request of $80 million loans from the Islamic Development Bank on behalf of the Ebonyi state government was also approved by FEC The Finance Minister said that the money would be used to finance the construction of the Abakiliki ring road project.

She said, “While the federal government is the one borrowing from the bank, the federal government will be unending these 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 Roads connect 13 local governments in the states as well as the neighbouring 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 neighbouring states will also benefit from this project.”

She also revealed that the Council approved the purchase of three locally manufactured boats for the Nigeria Customs Service for its surveillance and anti-corruption activities on the maritime waters. She said that there is a push to patronize made in Nigeria goods because of the coronavirus pandemic and also boost the economy, adding that the purchase approved for Customs would do done locally.

She said, “On prioritization of made in Nigeria products, as you know the president has set up an economic stimulus committee chaired by the Vice President. The work of the committee is to develop 12 months economic stimulus plan and we are at the final stage of that work.

“We have prioritized spending on that plan to use and consume made in Nigeria. For example, some of the public works projects that will employ a lot of our youths are to be done using strictly our raw materials, so we don’t have to import bitumen for example to build our roads.

“Some of the council memos that were taken given today have been in council waiting in the queue for a couple of months now. The one for transport is not new, it didn’t just come today and the council felt it should go because it’s been there for a long time.

“But we have got approval from Mr. President that spending as much as possible should be made in Nigeria on goods and products that are produced in Nigeria so that it saves our foreign exchange and also helps to grow the economy.”

Also, briefing, the Minister of Agriculture and Rural Development, Alhaji Sabo Nanono, said that the Council approved a loan facility of $1.2 billion to finance the mechanisation of agriculture in the country. He said that the planned mechanisation of agriculture would span across 632 local governments.

“Today, we presented a joint memo with the Federal Ministry of Finance in which we seek the approval for a loan facility of about 950 million Euros translated probably to 1.2 billion dollars.

“This loan is for the purpose of agricultural mechanisation in this country –that will cover about 632 local governments plus 140 processing plants.

“This is going to be a major revolution in the agriculture sector, that we have never seen before,’’ he said.

The Minister of Transportation, Mr. Rotimi Amaechi, said that the council approved a memo for the award of contract in the sum N683 million for the purchase of 19 vehicles for Nigeria Ports Authority (NPA).

“This is the first time in four years that NPA is buying any vehicle and that is why the council and said fine. “These are operational vehicles; they are not for management staff; they are all Toyota vehicles,’’ he said.

The  Minister of Power, Malam Sale Mamman, said the ministry sought approval for the revised estimated total cost for the augmentation of the subsisting contract in the sum N47.2 million. He said that the contract was for the provision of additional critical power grid infrastructure for the full evacuation and utilisation of 40mw currently from Kashimbila via Takum-Wukari and Yendev.

He said, “This is to evacuate completely 40 megawatts to the National Grid.

“If it is not evacuated, the Nigerian government will lose not less than 130 megawatts of power which is equivalent to almost nine million in a year,’’ he said.

The Minister of Information and Culture, Alhaji Lai Mohammed, said that the critical power evacuation served was not just Taraba and Benue but the entire North East.

“Power is something that you cannot store and once it is stranded, it poses a lot of risks.

“It is better for us to get these additional funds so that we evacuate it and then, of course, 40 megawatts power will do a lot to improve the lives of many Nigerians,’’ he said.