The Federal Government (FG) in a statement has projected to borrow a cumulative sum of N1.7 trillion to finance the 2020 budget. This represents an increase from the N1.6 trillion borrowed in 2019.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, disclosed this on Tuesday at the presentation of the Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) where N9.78 trillion was proposed for 2020 total budget.
The details: While explaining details on the draft of the 2020 to 2022 Medium Term Expenditure Framework and Fiscal Strategy Paper, Ahmed stated that the new borrowings would be 50% from an external source, while 50% would be from domestic sources. She confirmed that the debt service obligations for the country had also risen significantly as a result of increase in our national debt
Speaking on the proposed 2020 budget of N9.78 trillion, the Minister stated that oil revenue was projected to decline, while non-oil revenue was tipped to grow marginally.
“Oil revenue is projected to decline from N3.688 trillion in 2019 to N2.367 trillion in 2020. This is due to lower production and lower oil prices.
“New borrowing is put at N1.605 trillion for 2019, projected at N1.7 trillion for 2020, N1.6 trillion for 2021 and N1.3 trillion for 2022. The borrowings will be 50% local and 50% foreign,” she said.
Downsizing capital expenditure: On the 2020 budget, the Minister disclosed the downward review of capital expenditure in the country. According to her, the aggregate capital expenditure in 2019 was N3.187 trillion but in 2020, it has been lowered to N2.05 trillion and the next years, the pattern would be the same thing.
“Key Assumptions of the 2020 Budget Framework: Oil Production 2.18 mbpd; Oil Price $55/b; Exchange Rate N305/$; Inflation Rate 10.81%; Nominal Consumption N122.75 trillion; N142.96 trillion Nominal GDP; and GDP Growth Rate of 2.93%”.
In the meantime, the Federal Government has also warned Nigerians to brace up as the 2020 to 2022 fiscal years would be challenging with respect to revenue generation and rapid growth in personnel costs.
She however assured that government was ready to take firm decisions. To address rising personnel cost, she disclosed that “any government staff not captured in the Integrated Payroll and Personnel Information System (IPPIS) by October 2019 should forget their salaries.”
The latest disclosure by Mrs Ahmed suggests Nigeria’s debt challenge persists, and this may take the country’s debt profile to a new height in the coming year, while capital projects may face some setbacks.