The Senate has approved the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
President Muhammadu Buhari had in July forwarded the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the National Assembly for approval.
In approving it on Wednesday, the Senate maintained the crude oil benchmark price of $57 per barrel for 2022 as proposed by President Muhammadu Buhari – higher than the corresponding benchmark of $40 for 2021.
It also approved the total estimated expenditure of N13.98 trillion which includes the expenditures of N1.44 trillion for Government Owned Enterprises and donor funded projects amounting to N62.24 billion.
The sums of N15.46 trillion and N16.77 trillion are projected to be spent by the federal government in 2023 and 2024 respectively.
The exchange rate of N410/$ proposed by the executive was also approved.
Daily crude oil production of 1.88mbpd, 2.23mbpd, and 2.22mbpd were approved for 2022, 2023 and 2024 respectively.
This, the lawmakers say is in view of average 1.93mbpd over the past 3 years and the fact that a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism.
A fiscal deficit estimate of N5.62 trillion (including GOEs) was also approved as well as a projected new borrowings of N4.89 trillion (including Foreign and Domestic Borrowing). This is however, subject to the provision of details of the borrowing plan to the National Assembly.
The MTEF approval was sequel to a consideration of the report of the Senate Joint Committee on Finance.
Adeola Olamilekan, the chairman of the panel, who presented the report, said the oil benchmark of $57 per barrel be approved because of the age-long fiscal strategy of addressing the oil price shocks by the adoption of a higher than forecast oil price benchmark for fiscal projections over the medium term.
He also said the 2022 expenditure estimate includes statutory transfers of N613.36 billion; non-debt recurrent expenditure of N6.21 trillion (including N350 billion for recurrent component of the Special Intervention Programme).
Meanwhile, the lawmakers also approved a projected GPD growth rate of 4.20 per cent and inflation rate of 13 per cent.
An International Monetary Fund (IMF) loan of $3.5 billion at the rate of 0.01 per cent to 0.02 per cent was approved to shore up its internal borrowing and to reduce external borrowing because of the exchange rate risks.
Other parameters include:
* Fiscal deficit of N5.62 trillion (including GOEs).
* New Borrowings of N4.89 trillion (including Foreign and domestic Borrowing).
* Statutory transfers, totalling, N613.4 billion.
* Debt Service estimate of N3.12 trillion.
* Sinking Fund to the tune of N292 billion.
* Pension, Gratuities & Retirees Benefits of N567 billion; and
* Total Recurrent (Non-debt) of N6.21 trillion; Personnel Costs (MDAs) of N3.47 trillion; of Capital expenditure (exclusive of Transfers) N3.26 trillion; Special Intervention (Recurrent) amounting to N350 billion; and Special intervention (Capital) of N10 billion.
In his presentation, Mr Adeola said there is a need for continuous review of the Fiscal Responsibility Act to ensure that all revenues are remitted to the Consolidated Revenue Fund as at when due, in order to curtail frivolous deductions and diversion of funds by the MDAs.
All laws, he said, relating to mining businesses should be reviewed as a matter of urgency to ensure upward review of rates applied to royalties, ground rent and licenses renewal of all mining companies operating in Nigeria.
The panel noted that many revenue-generating agencies engaged in frivolous expenditure, diversion of funds and under- reporting of revenues by MDAs, hiding under the disguise of their enabling Acts.
Mr Adeola lamented the increasing amount of personnel costs of some agencies and parastatals of government – most of which goes to the top management staff. (as observed with SEC).
There was also an underpayment of custom duties on imported goods, due to smuggling and lack of installation of scanners at the port, he said. Royalties, ground rents and license renewal paid by all mining operators in Nigeria has been inadequate and their disclosures not transparent enough.
“The shortfall of revenues reported by MDAs is due to the shortcomings of the offices of the Accountant General (AGF), Auditor General of the Federation (AuGF) and Fiscal Responsibility Commission (FRC) in the area of staff strength and under-funding of these offices.
“Many Acts setting up agencies of the government are not nationalistic but self-serving. For example, Nigerian Investment Promotion Council (NIPC) Act, National Lottery Trust Fund Act, Bank of Industry Act, Bank of Agriculture Act, Energy Commission Act and Nigeria Nuclear Regulatory Commission ACT.
“Many agencies of the government demonstrate capacity to stand on their own without depending on Federal Government Budget thereby depleting the optimum usage of national resources. For example; National Agency for Food and Drug Administration and Control (NAFDAC) and Nigerian College of Aviation Technology, Zaria (NCAT).”
Many lawmakers, who took turns to contribute to the debate, warned the federal government against borrowing and suggested that alternative means of getting funds be considered.
The Senate asked the Salaries and Wages Commission to review the salary structure of all the MDAs, in other to come up with a new salary structure for the MDAs that will reflect the true financial position of the agencies.
They also called for the urgent implementation of the Petroleum Industry Act (PIA) as well as upward review of the budget of the Government Owned Enterprises (GOEs).
The lawmakers urged the federal government to strengthen the offices of the Accountant General (AGF), Auditor General of the Federation (AuGF) and Fiscal Responsibility Commission (FRC); to be strengthened in the areas of staffing and proper funding of activities to ensure optimal performance of their duties in order to adequately monitor the remittances of all government revenues.
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