How Nigerian govt will fund 2020 Budget – Finance Minister

Finance minister, Zainab Ahmed. [PHOTO CREDIT: Daily Trust]
Finance minister, Zainab Ahmed. [PHOTO CREDIT: Daily Trust]

The Nigerian government has explained how it plans to source funds for the N10.33 trillion 2020 budget.

In the Appropriation Bill presented by President Muhammadu Buhari to the National Assembly last week, the government estimated expected revenue for the fiscal year at about N8.155 trillion.

This comprises oil revenue of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion.

The projections were based on an oil production level of about 2.18 million barrels per day, oil price benchmark of $57 per barrel and an exchange rate of N305 to the dollar.

The proposals include a budget deficit of about N2.17 trillion, representing about 1.52 per cent of the Gross Domestic Product (GDP).

The Minister of Finance, Budget and National Development, Zainab Ahmed, said this would be funded with about N1.64 trillion domestic and external borrowings.

Details of the planned borrowings show about N850 billion would come from external sources, while domestic sources would provide about N744.99 billion.

The minister who disclosed this in Abuja at the public presentation of the details of the 2020 Budget estimates said the share of government’s oil revenue is expected to drop in 2020 by about N1.05 trillion.

With crude oil price benchmark put at about $57 per barrel and oil production of about 2.18 million barrels per day, Mrs Ahmed said the government hopes to realise about N2.62 trillion from oil exports, about 28 per cent lower than the N3.69 trillion estimated in 2019.

Also, the minister said during the year, the government hopes to earn a 212 per cent increase to about N124.3 billion in dividend from the Nigeria LNG. About N39.9 billion was earned last year from the same source.

The revenue from the government’s share of minerals and mining is expected to increase by N607.6 million, or 47 per cent, from N1.3 billion in 2019 to N1.9 billion in the coming year.

From the non-oil sector, the minister said N1.8trillion is expected in 2020, about N395.9 billion or 28 per cent higher than N1.4trillion realised last year.

A breakdown of the non-oil sector revenue includes N839.3 billion from Company Income Tax (CIT), N292.6 billion from value-added tax (VAT); N6i8.7 billion from the Nigeria Customs Service and N54.6 billion from Federation Account levies.

Mrs Ahmed said revenue earning from the top ten government-owned enterprises (GOEs), excluding the Nigerian National Petroleum Corporation, is expected to increase by about N34.8 billion, or four per cent in 2020, from N955.4 billion to about N990.1 billion.

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During the year, the minister said the government hopes to realise an increase in the remittance of operating surplus from the top 10 GOEs in line with the requirements of the Fiscal Responsibility Law, 2007.

Under the law, GOEs are allowed to reserve 20 per cent of their revenue to fund their operations, while the remaining 80 per cent is remitted to the Consolidated Revenue Fund at the Central Bank of Nigeria (CBN).

The minister said remittances from the GOEs are expected to grow by N77.1 billion, or 21 per cent, from N359.8 billion in 2019, to about N436.9 billion in 2020.

In addition revenues from independent sources are expected to rise from about N631.1 billion in 2019 to about N849.9 billion.

Another 1015 per cent increase in revenue is expected from signature bonuses and license renewals, from where about N939.3 billion is expected during the year, against N84.2 billion in the current year.

About N237 billion is expected from domestic recoveries, assets and fines, which is about 17 per cent higher than the about N203.4 billion realised in 2019, while N200billion is expected to accrue from stamp duties and N125.5 billion from exchange rate differentials.

The minister, however, noted that the N710 billion the government expected from the proceeds of oil asset ownership restructuring would not happen, while the amount expected from grants and donations will drop by N173.5 billion.

Out of about N209.9 billion realised in 2019, the minister said the government may not be able to realise more than N36.4 billion in 2020.

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