Minister of Finance, Budget and National Planning, Zainab Ahmed, has alerted the nation to the resurgence of COVID-19 in Europe, which has triggered further fall in oil price at the international market, saying the development is likely to affect Nigeria’s 2021 budget estimate.
The 2021 budget was predicated on $40 per barrel. But the current price of the crude oil in the market stands at between $37 and $38 per barrel
The minister said that though the Federal Government “took the safer path” to benchmark the crude oil price in the 2021 budget, the second wave of COVID-19 in Europe was threatening the estimate.
Ahmed made the comment yesterday when she appeared before the Senate Committee on Finance to defend her ministry’s budget. The chairman of the panel, Adeola Olamilekan (APC, Lagos), had asked the minister about the contingency plans the Federal Government put in place to insulate the budget from the shocks of falling oil price.
The minister responded: “The actual projection was $40 per barrel and that is the average price that we projected to be for the year. Some of the institutions that are responsible for tracking price of crude oil, actually have crude oil price going as far as $50, $52 per barrel. We took the safer path. It seems the second wave of COVID-19 in Europe is affecting us. We are hoping to have clarity as to which direction to take in the next week or two.”
Ahmed dismissed insinuations that the Federal Government may increase Value Added Tax (VAT) again by 2.5 per cent in 2021. “As for the finance bill, we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of recovery – not only for government but businesses as well,” she said.
When they appeared to defend their budgets, almost all the heads of the agencies under the committee’s supervision lamented that their budgetary allocations were too small to meet their obligations.
The Accountant General of the Federation, Ahmed Idris, said his agency has 37 offices in dire need of rehabilitation. But the minister said the budget office could not go beyond the available resources. “Everybody is claiming scarce resources, but we can’t go beyond what is available,” she said.
The Director General, Budget Office, Ben Akabueze, said until the Federal Government gets more revenue, no agency of government would get enough allocation.