- Budget framework based on oil production of 1.86mbpd for 2021, USD$40 per barrel Oil Price Benchmark and Exchange Rate of N379/US$1
The Senate on Wednesday passed the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper ahead of the presentation of the 2021 Appropriation Bill to the National Assembly by President Muhammadu Buhari on Thursday.
The passage was sequel to consideration and adoption of the report of the Joint Committee on Finance; and National Planning and Economic Affairs.
Chairman of the Joint Committee, Senator Solomon Olamilekan Adeola (APC – Lagos West), in his presentation said the key parameters and macroeconomic framework driving the 2021-2023 Medium Term Expenditure Framework were revised in line with emerging realities that necessitated the revision of the 2020-2022 Medium Term Fiscal Framework.
Accordingly, the Senate approved daily crude oil production of 1.86mbpd, 2.09mbpd, and 2.38mbpd for the year 2021, 2022 and 2023; USD$40 per barrel as Oil Price Benchmark; and an Exchange Rate of N379/US$.
Inflation Growth Rate was projected at 11.95 percent; while Gross Domestic Product (GDP) growth rate was fixed at 3percent.
The upper chamber also approved the Federal Government’s retained revenue of N7.89 trillion; Fiscal deficit of N5.19 trillion; N4.28 trillion projected new borrowings; Statutory transfers totaling N484.4 billion; N3.12 trillion as Debt estimate; N220 billion Sinking Fund; and N520.6 billion as Pension, Gratuities and Retirees Benefits.
Additionally, the Senate approved the Federal Government’s Aggregate Expenditure of N13.08 trillion; out of which N5.66 trillion is for Total Recurrent (Non-Debt); N3.05 trillion for Personnel Costs; N3.58 trillion for Capital Expenditure; N350 billion for Special Intervention (Recurrent); and N20 billion for Special Intervention (Capital).
The Senate in its adoption of the Joint Committee’s recommendations, underscored the need to amend Sections 21(1) and 21(2) of the Fiscal Responsibility Act to improve revenue generating and remittance capacity of Agencies of Government.
Calling on its relevant Committees to examine laws guiding the operation of all revenue generating agencies with a view to plugging wastages, the Senate advised the Federal Government to streamline stamp duty collection by Ministries, Departments and Agencies (MDAs) and domicile same with the Federal Inland Revenue Service (FIRS).
On meeting revenue targets, the upper chamber emphasized the need for the institution of sanctions on non-performing MDAs over inability to meet revenue targets, adding that the Federal Government must ensure that all Ministries, Departments and Agencies pay in full and promptly, for services rendered by other agencies, except where it is established that the beneficiary agencies are statutorily exempted from such payments.
The Senate further tasked the Federal Government to direct all outstanding remittances currently held by revenue-generating agencies to be remitted into the Consolidated Revenue Fund (CRF) not later than thirty days from the date of approval of its resolution.
It added that the Federal Government, through the Bureau of Public Enterprises (BPE) examine the activities of all Government Agencies currently operating under the partial commercialization agreement, to determine those that may be qualified for full commercialization, in order to enable them compete with their peers in the private sector, and therefore contribute more meaningfully to the revenue generation drive of the Federal Government.
The upper chamber also advised the Federal Government to direct the Accountant General of the Federation to develop a template to make for strict cost-control measures for all revenue-generating agencies, with clear sanctions for non-compliance.
While charging Government to ensure that all statutory transfers due to agencies be paid forthwith to enhance overall performance, the Senate called on the Nigeria National Petroleum Corporation (NNPC) to device strategies to reduce average cost of production in accordance with international best practices.
In a related development, the Senate President, Ahmad Lawan, has advised the Federal Government to reduce its borrowing by seeking alternative ways of implementing infrastructural projects not funded through local and foreign loans.
“We need to put up a lot of effort to ensure that these revenue generating agencies do their work promptly, efficiently and effectively.
“Where they have challenges, we must help them. Like most of us said, borrowing needs to be carefully applied here. There are projects that I feel we should ensure we don’t borrow to fund.
“We should explore other opportunities in sourcing funds such as the Build-Operate-Transfer (BOT), Public Private Partnerships and so many other options. I think we should explore on those so that we minimize the borrowing.
“There are lot of businesses that have interest in the development of our infrastructures, so we should explore the other means.
“But then again, we can not eliminate borrowing, that is the sad part of it. I think in the past we deluded our selves into thinking that Nigeria is the richest country in the world, meanwhile we are not developing our infrastructure.
“If we had applied whatever we had then, especially in our good years, we would have found that we wouldn’t have any money to spare to call ourselves rich.
“We need to look at the possibility of reducing the kind of borrowing we do in order to ensure that we don’t accumulate so much deficit and end up spending so much of our revenue servicing debts,” he said.
The Senate President who bemoaned the high recurrent expenditure profile of government, underscored the need for the merger of agencies so as to reduce cost of governance.
“Whenever we talk of cost of governance, we think of how to merge the different agencies.
“I think there is need for us to muster the political will, because we know what to do, but when it comes to doing the right thing, we find it difficult to do it.
“I think the time has come for government to do so, and government includes us, to address this issue.
“There are so many agencies, and these are agencies that were created to address specific challenges at the time.
“Now, they are irrelevant. They are simply conduits that are given money every year, while they have no value to add to governance.
“We need to really work closely with the Executive arm of Government. I know it is going to be a tough call, because it will be said this is not a time for people to lose their jobs, but somehow we need to find a way out of this as the cost of governance is high,” Lawan said.
