FEC approves N8.73 budget proposal for 2019

25 Oct 2018
Financial Nigeria


The Federal Executive Council also approved a $1.5 million AfDB loan to develop the Abidjan-Lagos highway.

Nigerian President Muhammadu Buhari

The Nigerian government’s 2019-2021 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP), which was proposed last week by the Budget Office of the Federation, was approved by the Federal Executive Council (FEC) on Wednesday. The MTEF-FSP outlines the federal government's fiscal policies/strategies and macroeconomic projections for 2019-2021. 

The Minister of Budget and National Planning, Senator Udoma Udo Udoma, who spoke with journalists following the FEC meeting yesterday said a budgetary proposal of N8.73 trillion for 2019 fiscal year was approved by the Council. The proposed budget, which is part of the MTEF-FSP, is N400 billion or 4.5 percent lower than the 2018 budget of N9.12 trillion.

“The MTEF-FSP that was approved is designed to translate the strategic development objectives of the Economic Recovery and Growth Plan (ERGP) into a realistic and implementable budget framework for the medium term," Udoma said.

Last week, Udoma said the reduction in spending in 2019 will reduce the country's fiscal deficit, and hence its borrowing.

According to him, Nigeria's GDP growth is expected to increase from 0.8 percent in 2017 to 2.1 percent in 2018 and then 3.01 percent in 2019 with the continuing implementation of the ERGP as well as an improved outlook for oil prices. The key assumptions highlighted in the approved MTEF-FSP for 2019 budget include oil price benchmark of $60 per barrel, oil production of 2.3 million barrels per day, exchange rate of N305/$1, and GDP growth rate of 3.01 percent.

The International Monetary Fund (IMF), earlier in October, had revised downward Nigeria's economic growth rate for 2018 from an earlier forecast of 2.1 percent to 1.9 percent. The IMF also projected the Nigerian economy will grow by 2.3 percent in 2019, buoyed by the impact of recovering oil production and prices.

The draft 2019-2021 MTEF-FSP also shows that Nigeria faces significant medium-term fiscal challenges, especially with respect to revenue generation. The document will be transmitted to the National Assembly for its consideration and approval.

The Federal Executive Council also approved a plan for a $1.5 million loan from the African Development Bank (AfDB) to develop the Abidjan-Lagos corridor highway. The Minister of Finance, Zainab Ahmed, told reporters after the Council’s meeting on Wednesday.

She said, “The multinational project that is running on the Abidjan-Lagos will be a highway project that will be in six lanes, a dual carriage highway that involves five countries: Nigeria, the Republic of Benin, Cote d’Ivoire, Ghana and Togo.”

In 2016, the AfDB had published the Abidjan-Lagos Corridor Highway Development Project Study document and approved the sum of $13.5 million in the form of loans and grants to finance the project.

The $13.5 million has been distributed among participating countries and the component for Nigeria is $1.5 million. Similarly, the Minister of Power, Works and Housing, Babatunde Fashola, told reporters that FEC also approved a contract for the rehabilitation of the Lagos-Badagry expressway. 

“The council approved 46 kilometres from Agbara through to Seme Border,” said Fashola. “And out of that 46 kilometres, 24 will be six lanes and 22 kilometres will retain the current four lanes. The contract price is N63.23 billion.”

He explained that the road is part of the Abidjan-Lagos highway, and the Nigerian section is the Lagos, Eric Moore to Badagry to Seme Border.

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