The Nigerian government will borrow from domestic and foreign sources, including multilateral and bilateral finance organisations, to finance the 2021 federal budget deficit.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said this on Tuesday at the public presentation of the details of the budget in Abuja.
According to the minister, loans from domestic and foreign revenue sources are projected to contribute about N2.14 trillion each, while loans from multilateral and bilateral groups will provide about N709.69 billion and privatisation proceeds about N205.15 billion.
Mrs Ahmed said the other source of funding for the deficit are proceeds from the privatisation of public enterprises.
Budget of Economic Recovery and Resilience
President Muhammadu Buhari presented the “2021 Budget of Economic Recovery and Resilience” to the joint session of the National Assembly last Thursday in Abuja.
The president said he expects budget to help place the country’s economy on the path of recovery, growth and resilience.
The key parameters in the medium term expenditure framework (MTEF) and the fiscal strategy paper upon which the initial proposals were based, the minister said, 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.
Although the minister said 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.
2020 Budget Performance
On the performance of the 2020 Budget, the minister said 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 N831.4 billion (about 77 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 N266.14 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.
“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,” the minister said.