The Federal Government, yesterday, presented a revised 2018 to 2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate for consideration and passage. The government specifically adjusted the Gross Domestic Product (GDP) growth rate from 4.5 per cent to 3.5 per cent.
Representative of the Federal Government at an interactive session with the Senate Joint Committee on Finance, Appropriations and National Planning, Minister of State for Budget and National Planning, Zainab Ahmed, explained that other key parameters and assumptions, including oil benchmark, daily oil production estimates and exchange rate were retained in the revised documents.
Ahmed allayed fears that the adjustments would affect the N8.612 trillion 2018 budget estimates, adding that these have already been reflected in the 2018 budget estimates submitted by President Muhammadu Buhari to a joint session of the National Assembly a fortnight ago.
The Minister listed some of the adjustments made to the 2018 to 2020 MTEF submitted by the Executive to the National Assembly in October to include N710 billion to be generated from restructuring government’s equity in all the Joint Venture (JV) oil assets; N320 billion additional revenues from revision of terms to improve government take in the production sharing contracts; additional N60 billion from excise duties on cigarettes and alcohol; N305 billion additional company income taxes from the Voluntary Assets and Income Declaration Scheme (VAlDS); N100 billion from improvements by FIRS in the collection of Value Added Tax (VAT); N2.5 billion from special taxes on insurance of luxury cars, as well as surcharge on luxury goods and N250 billion provision as unspent balance carried forward from 2017.
She said: “The key assumptions on the macro framework is as defined in our MTEF and the only difference in the key assumptions is that we have adjusted the GDP growth from 4.5 per cent. And this is as a result of a meeting we had with you while reducing the last MTEF down to 3.5 per cent. But all the other assumptions at 2.3 million barrels per day, oil price of $45 per barrel, exchange rate of N305/$1 are the same.
“The fiscal deficit is now N2.05 trillion, down by over N940 billion, also pushing the debt/GDP ratio downwards from 2.61 per cent to 1.77 per cent.”
The Minister told the committee that the adjustments were the fallout of the recommendations of a committee chaired by Finance Minister, Kemi Adeosun, which identified additional revenue sources of about N1 trillion to cut the 2018 budget deficit.
She further stated: “When the FEC approved the MTEF/FSP, it constituted a committee chaired by the Minister of Finance, which was tasked with identifying additional sources of about N1 trillion revenues to cut the 2018 budget deficit and new borrowings. The outcome of the work of the committee necessitated a revision of the Medium Term Fiscal Framework (MTFF), which also formed the basis of the 2018 budget proposal.
“This briefing note and accompanying submissions relate to the revised MTEF/FSP and MTFF, which are in alignment with the 2018 Executive Budget proposal and were part of the documents that accompanied the 2018 budget laid before NASS.”
Other lawmakers who made contributions insisted that the non-oil revenues were unrealistic. They cited the Federal Government’s independent revenue projection of N807 billion for 2017, where only N155.14 billion (representing 26 per cent collection) was achieved as of September this year.
The Chairman, Senate Committee on Finance, John Enoh, and a member of the joint committee, Abdullahi Danbaba Ibrahim, wondered why the same projection was used in 2018.
“Why don’t we have anything on interest rate as part of the MTEF document? That will be the best way to talk about aligning the monetary and the fiscal. Why are we putting more than N800 billion as independent revenue when the President admitted in his address to the National Assembly that it had suffered about 74 per cent variance. And yet in 2018, we are still putting more than N800 billion for independent revenue. Are we just balancing the figures? How do you expect to get the revenue if from the beginning even what you are projecting you know that you can’t make it?” Enoh asked.
In his contribution, another member of the committee, Adamu Aliero (APC, Kebbi State) said: “I find it difficult to understand why the budget for 2017 should be truncated by December 31 when less than 20 per cent of the capital budget has been released. By withholding capital releases, you are more or less contracting the economy.”
