The National Assembly yesterday increased the oil price benchmark to $28 per barrel from the $25 proposed by the executive in the revised Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) forwarded to the lawmakers for approval.
The two chambers also reduced from 1.9 million to 1.8 million barrel per day oil production target proposed by the executive in the MTEF/FSP documents.
In addition, the lawmakers approved the $5.513 billion external loan request of the executive to fund the budget deficit.
Preparatory to the approvals at plenary yesterday in Abuja, the Senate had considered and adopted a report of Senator Olamilekan Adeola-led Committee on Finance that worked on the revised MTEF/FSP documents.
Other critical parameters like the exchange rate of N360 to $1; 14.43 inflation rate; 4.42 GDP growth rate were retained.
Other proposals approved are N5.09 trillion FGN’s revenue; N10.51 trillion proposed expenditure; N4.95 trillion fiscal deficit; N4.17 trillion new borrowings (including foreign and domestic borrowing).
Others are: N398.5 billion as statutory transfers; N2.68 trillion for debt serving; N272.9 billion as a sinking fund; as well as N536.7 billion for pension and gratuities.
The Senate also retained the critical components of the proposal as presented by the executive with the adoption of N10.51 trillion as total expenditure, N4.93 trillion as total recurrent, N2.83 trillion for personnel cost and N2.23 trillion for capital expenditure.
Presenting the committee’s report, Adeola said the increase effected on the oil price benchmark was as a result of the recent upward trend of the crude oil market, which yesterday stood at $38 per barrel with a strong expectation that the price would rise to $45 per barrel.
The Senate also approved the $5.513 billion external loan request of the presidency to fund the revised 2020 budget deficit.
This was sequel to the presentation of the report of the Senator Clifford Ordia-led Committee on Foreign and Local Debts that recommended the approval of the external borrowing.
According to the Senate, the loan approval would immediately provide the much-needed liquidity to finance deficit the revised Appropriation (Amendment) Act of 2020 and enable the federal government to implement and pursue some key priority activities towards the curtailment of the COVID-19 pandemic.
“Flowing from this and based on clarification and information provided by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, the Senate decided to accelerate the consideration for approval, a sum of $5,513,000,000, being the first component of the request in respect of the funding of the budget deficit proposed for the 2020 fiscal year.
“The approved $5.513 billion loan, which is to be sourced from multilateral institutions for funding on concessionary terms, include $3.4 billion to be borrowed from International Monetary Fund (IMF), $1.5 billion from World Bank, $500 million from African Development Bank (AfDB) and $133 million from Islamic Development Bank (IDB),” the report said.
The Senate, however, suspended a decision on $1.5 billion loan request to fund projects in the 36 states due to the non-availability of details to back up the projects.
The Senate noted that in the absence of the required details, it would resume the consideration of the other two outstanding components of the president’s external borrowing “request relating to funding of priority projects of the federal government to be captured in the budget estimates for 2021 and facilities to support states’ government to face the challenges of the COVID-19 pandemic.”
Speaking after the adoption of the reports, the President of the Senate, Dr. Ahmad Lawan, urged the Senate Committee on Privatisation to liaise with the Bureau of Public Enterprise (BPE) in ensuring that the projected N260 billion from the proceeds of privatised agencies is realised and used to fund the budget.
He frowned at some of the special accounts being kept by the executive, particularly Natural Resources Development Accounts.
According to him, such accounts at this time of scarcity of funds to finance the budget are not necessary.
“Keeping monies in Natural Resources Development Accounts is more of waste than serving critical purposes,” he said.
He adjourned sitting of the Senate till next Tuesday for consideration and possible passage of the revised N10.509 trillion 2020 budget.
Also yesterday, the House of Representatives approved $22,798,446,773 billion federal government’s loan request under the 2016–2018 Medium Term External Borrowing plan.
The House approved the loan request at plenary after the Chairman of its Committee on Aids, Loans and Debt Management, Hon. Ahmed Safana, had submitted its report, which was adopted.
The House, however, urged the federal government to source funding for the Port Harcourt-Maiduguri rail line in the next borrowing plan.
It said: “The House approves the under listed ongoing negotiation of external borrowing in the sum of $22,798,446,773 (under the 2016–2018 Medium Term External Borrowing plan.
“World Bank – $2,854,000,000; Africa Development Bank – $1,888,950,000; Islamic Development Bank (IDB)- $110,000,000; JICA – $200,000,000; German Development Bank – $200,000,000; China Eximbank – $17,065,496,773; and AFD- $480,000,000.”
The House also yesterday called on the federal government to increase the crude oil bench mark from $25 to $28 per barrel.
It also described the Excess Crude Account (ECA) as illegal, because it has no backing of the law and recommended that the account be scrapped with immediate effect. Besides, it called on the federal government to comply with sections 80 and 81 of the 1999 Constitution as amended.
The House made the call after approving the report on the revised 2020–2022 MTEF and FSP laid before it by the Chairman, House Committee on Finance, Hon. James Abiodun Faleke.
It said the National Assembly should, as a matter of urgency, amend the Fiscal Responsibility Act to make it more responsive to present-day realities, while also calling on all agencies of government to submit their revenue performances to the National Assembly on a monthly basis.
It stated: “That the Excess Crude Account has no backing of the law. The committee therefore recommends that the account be scrapped with immediate effect and comply with sections 80 and 81 of the 1999 Constitution of the Federal Republic of Nigeria (as amended);
“That the crude oil benchmark is recommended to be increased by $3 thereby increasing from $25 to $28 per barrel; and that the oil production output should be retained at 1.8 million per barrel.”