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Economy & Politics

2021 Budget: FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion

This tops 2020 budgeted expenditure of N10.8 trillion.

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FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion,IMF, International monetary fund, Zainab Ahmed, Nigeria's Minister of Finance, Budget and National Planning

The Federal Government is projecting to spend N11.86 trillion for 2021. This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed at a virtual presentation of the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) held on Friday.

According to the finance minister, the government is planning to spend N11.86 trillion against revenue of N6.98 trillion meaning the government will have to grapple with a fiscal deficit of  N5.16 trillion.

Zainab Ahmed;

“The 2021-2023 MTEF&FSP is the pre-budget statement that provides the framework for the development of the 2021 budget. It is being framed against the backdrop of challenging global macroeconomic environment as well as domestic factors.

“We aim to keep the deficit within the three percent ceiling over the medium term and are therefore working on identifying new revenue sources and or cost of reduction.”

The minister noted that the 2021-2023 draft had been prepared against the backdrop of heightened global economic uncertainty.

READ MORE: Lawmakers now closer to an agreement with stakeholders on free electricity supply

Earlier today President Buhari signed the revised 2020 national budget of N10.8 trillion, which was passed by the National Assembly in June. The National Assembly passed a revised budget of N10.8 trillion on the 11th of June after the Federal Executive Council (FEC) approved a revised budget of N10.523trillion in May. 2020 Budget is based on a revised oil benchmark of $25 per barrel as against $57 while crude production was reduced from 2.18 million to 1.94 million barrels per day  Budget deficit for 2020 is estimated at N5.365 trillion.

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As of March 2020, the FG was running a 52% shortfall in the first quarter of the year with actual revenue collected of N950 trillion compared to budgeted revenue  N1.96 trillion.

Explore Economic Research Data From Nairametrics on Nairalytics

What this means: Nigeria is facing an unprecedented revenue crisis exacerbated by the Covid-19 pandemic and the crash in oil prices. At N5.16 trillion, Nigeria’s projected budget deficit will be 43% of spending and about 3.6% of GDP if the budget is passed. A budget deficit means the government will have to borrow heavily next year to fund its expenditure programs.

The government received a $3.4 billion funding from the IMF in April and expects another $3.5 billion from the World Bank in August 2020. The government also revealed it has no plans to access the commercial market for foreign debts as it takes advantage of lower interest rates in the domestic market.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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    Business News

    Financial Autonomy: Governors, State Speakers reach agreement

    The Governor also said that the final document of the agreement should be ready for implementation by May 2021.

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    The Governors’ Forum, Conference of Speakers of State Legislature and other governance stakeholders announced that they reached a resolution over the implementation of financial autonomy for State Legislature and Judiciary.

    This was disclosed by the Ekiti State Governor and Chairman Nigeria Governors’ Forum, Kayode Fayemi, after the meeting, which was held in Abuja on Monday, and presided by the Chief of Staff to the President, Prof. Ibrahim Gambari.

    What the Governor said

    “We are here for legislative and judicial autonomy and Governors; Speakers of State Assemblies and the Judges of the States are on the same page as far as this issue is concerned,” he said.

    We just emerged from a meeting with the Solicitor General of the Federation, the representatives of the judiciary and those of the Conference of Speakers and we are all in force; an agreement has been reached.

    READ: Finance Minister tasks FG and state governments to control spending

    The issue is about implementation. There has been no objection from governors on judicial and legislative autonomy.

    As a matter of fact, it would not have passed if governors were not in support in the first instance. So, that issue has been fully and holistically addressed,” Fayemi said.

    The Governor also said that the final document of the agreement should be ready for implementation by May 2021 and urged striking workers  to return  to offices “because as far as this has gone, we have met with all the parties concerned and the President, through his Chief of Staff, has been monitoring what has been happening.”

    What you should know

    Nairametrics reported earlier this month that members of the Judiciary Staff Union of Nigeria (JUSUN) went on strike with the closure of Federal High Courts in different states across the nation. The union said the purpose of the strike was to draw attention to the financial autonomy of Nigeria’s Judiciary.

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    Business

    Finance Minister tasks FG and state governments to control spending

    The Minister also denied claims that the FG printed N60 billion as top-up for March FAAC numbers.

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    land borders to be reopened soon, Finance, Ministaer, vow to recover AMCON debt through issuance of promissory notes, FG reiterates stance on IPPIS as ASUU threatens strike, Finance Minister, Zainab Ahmed identifies capital market as key driver for economic growth , Nigeria has paid $1.09 billion to service its debts in 2019  , Dividends on oil proceeds will be taxed - FG , State governments own most bad roads - Finance Minister says, Budget deficit increases by N351.98 billion, as FG misses revenue target, Economy: Funding MSMEs in Nigeria , Finance Bill: New tax regime to take effect from Jan 2 - FG , Again, Finance Minister argues that Nigeria is not in debt distress , ECOWAS: Single currency regime not kicking off in 2020  , FG: CBN holds N43 billion stamp duty charges collected by banks , FG may shift deadline to deactivate bank accounts without tax verification, Confusion as ministry and presidency disagree over Finance Act start date, 7.5% VAT: Implementation to begin Feb 1 – FG , Finance Minister: Nigeria to go into recession if ..., Foreign tech companies that will now pay tax to FGN: see the criteria

    The Minister of Finance, Zainab Ahmed, has called on Governments on all levels in Nigeria to control spending amid decreasing revenues and urged for prudent government spending. The Minister also denied claims that the Federal Government printed N60 billion as top-up for March FAAC numbers.

    The Minister disclosed this in an interview on Monday and warned that the FG was not generating enough revenue to align with its spending habit.

    READ: UK to return £4.2million seized from Ibori to Nigeria

    Zainab Ahmed added that the FG would maintain its stance from January 2021 to end total fuel subsidies in Nigeria, and confirmed talks with organised labour on subsidy removal.

    “As a nation, the Federal, State and Local governments must review expenditure patterns. We are spending too much and we are not generating enough,” she said.

    READ: Resolving the global debt and liquidity crises, issues and possible solutions

    What you should know 

    Nairametrics reported last month that the Debt Management Office had announced that Nigeria’s public debt at end of 2020 was N32.915 trillion. The DMO said the sum of the debt included the Debt Stock of the Federal and State Governments, as well as the Federal Capital Territory.

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