Buhari proposes N10.33 trillion spending for 2020

08 Oct 2019
Financial Nigeria


The 2020 budget proposal is based on oil production estimate of 2.18 million barrels per day (bpd), crude oil price of $57 per barrel, and exchanged rate of N305 to the dollar.

Nigerian President Muhammadu Buhari

President Muhammadu Buhari, today, presented a proposed budget of N10.33 trillion for the 2020 fiscal year to a joint session of the National Assembly (NASS) in Abuja. The 2020 Appropriation Bill is N1.4 trillion higher than the N8.92 trillion budget for 2019. The presentation on Tuesday is the earliest presentation of the budget since 2006. It is part of the government's plan to return the country to a January-December budget cycle, beginning with the 2020 budget.

The president specifically urged the NASS to expedite work on the 2020 Appropriation Bill like they did on the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP), which the legislative arm of government considered and passed within one week. The MTEF-FSP outlines the federal government's fiscal policies/strategies and macroeconomic projections for 2020-2022. Buhari said the MTEF sets out the parameters for the 2020 budget.

According to Buhari, the 2020 budget proposal is based on oil production estimate of 2.18 million barrels per day (bpd), down from the 2.3 million bpd in 2019; crude oil price of $57 per barrel, as against $60 per barrel last year; and exchanged rate of N305 to the dollar. He said Nigeria’s gross domestic product (GDP) is expected to grow at 3.01 percent in 2020, while inflation rate is projected to drop to 9.98 percent.

Buhari said N2.14 trillion is proposed for capital projects in 2020. Meanwhile, the budget proposal has non-debt recurrent (personnel & overheads) as N4.8 trillion. Statutory transfers in the proposed fiscal plan is: N556.7 billion; debt service: N2.45 trillion; sinking funds for retirement of debt: N296 billion.

On sectoral allocation, the president said works and housing is allocated – N262 billion; transportation – N123 billion; Universal Basic Education Commission (UBEC) – N112 billion; Defence – N100 billion; Agriculture – N83 billion; Water Resources – N82 billion; Education – N48 billion; Health – N46 billion; Social Investment Programme (SIP) – N30 billion; Federal Capital Territory (FCT) – N28 billion. The proposal has a budget deficit of N2.8 trillion.

Buhari said total revenue estimated for 2020 is N8.155 trillion. This includes oil revenue of N2.64 trillion, non-oil revenue of N1.81 trillion; and N3.7 trillion from other sources. The president said the government’s tax revenue is anchored on a new 7.5 percent Value Added Tax (VAT) rate. He said the VAT increase from 5 percent to 7.5 percent will help finance health, education, and infrastructural programmes.

Buhari said while the current VAT Act already exempts pharmaceuticals, educational items and basic commodities, the new VAT rate will expand the exemption to businesses with less than N25 million turnover.

President of the Senate, Ahmad Lawan, reiterated the need for the country to return to a January-December budget cycle, as he promised the National Assembly would accelerate work on the 2020 Appropriation Bill. He said all budget defence sessions would be concluded in October, ahead of a planned passage of the budget in December. The Senate President, therefore, urged the ministries, departments and agencies of the federal government to appear before the NASS committees to defend their budget proposals as contained in the bill.

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