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Home Economy Budget

FG to reduce N1.5 trillion from 2020 budget due to coronavirus

Chidinma Nwagbara by Chidinma Nwagbara
March 19, 2020
in Budget, Business News, Politics
FG seeking approval from National Assembly for $1.2 billion agric loan, Capital market to get more tax incentives - FG , FEC reviews Ajaokuta-Kaduna-Kano gas project contract, approves $2.571 billion, FG to reduce N1.5 trillion from 2020 budget due to coronavirus, Proposed N12.43 trillion deficit for 2023 budget, disturbing- Senate
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The Federal Government has disclosed plans to reduce the 2020 budget by as much as  N1.5 trillion.

The disclosure was made by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, while briefing State House correspondents at the end of the Federal Executive Council, (FEC) meeting presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa, Abuja.

COVID-19: How the tables turned on Europe, New Tech Opportunities amid COVID-19 Crisis, FG to reduce N1.5 trillion from 2020 budget due to coronavirus

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Ahmed said that there will be a cut of 20% from the capital expenditure of the 2020 budget while recurrent expenditure will be reduced by as much as 25%. Recall that She had earlier in the month hinted at the possibility of reducing the 2020 budget due to the coronavirus outbreak.

(READ MORE: COVID-19: President Buhari sets up committee to look at impact on 2020 budget)

According to Ahmed, Buhari had approved other far-reaching measures in the face of the current economic realities occasioned by COVID-19. One of those measures is the cut in crude oil benchmark from $57 per barrel to $30 per barrel in the revised budget. The global crude oil prices are now less than $30 per barrel.

Ahmed’s words: “We should cut down on the size of the federally funded upstream projects of the Petroleum sector. The reason being that we want to be able to receive more revenue by less reduction from NNPC. 

“The reduction of the crude oil price from $57 per barrel to $30 means that we are going to get so much less revenue, almost 45 percent loss as we planned. And because of that, we have to amend a number of projections in the budget as well as in the MTEF to reflect our current reality. 

“We also need to adjust Customs revenue which has been budgeted at N1. 5 trillion but we are adjusting it downwards because we anticipate that trade volumes will reduce and once trade volume is reduced, Customs revenue will be significantly impacted as a result.”

READ MORE: Importing petroleum products must stop, NNPC has over $20bn assets – Kyari 

Speaking further, Ahmed said the government would continue to pay salaries and would not sack workers, but would not be recruiting or increasing its workforce size for the time being.  

On concerns of the economy slipping back into recession, Ahmed said the budget cut would result in about 40 to 45% reduction and also it will affect states because it means FAAC will be significantly reduced.

“FAAC is just a pool of funds and we share what is realized, so it will affect the states as well. So we are expecting the states to take similar measures to amend the plans that we have made and bring them down to current realities.

“On plans to scale back VAT and excise duty, I am not making any commitment on that right now because these are provisions in the law in the Finance Act and as you know, we will, even in the amendment to the MTEF and the budget, have to engage with the National Assembly. The fiscal authorities are working with the fiscal authority team and we will get the President’s approval before we come up with what we will announce to the public.” Ahmed added.


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Tags: 2020 budgetCoronavirusCovid-19FECMTEFNNPC
Chidinma Nwagbara

Chidinma Nwagbara

Chidinma holds a degree in Mass communication from Caleb University Lagos and a Masters in view in Public Relations. She strongly believes in self development which has made her volunteer with an NGO on girl child development. She loves writing, reading and travelling. You may contact her via - chidinma.nwagbara@nairametrics.ng

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